statutory deductions

Statutory deductions are mandatory taxes that employers withhold from employees’ gross earnings. These statutory employee deductions are typically used to fund various government benefits such as social security, unemployment insurance, Medicare, and pension plans.

The amount of statutory deductions will vary as they depend on an employee’s gross earnings. In a progressive tax system, like in the U.S., employees earning lower salaries contribute a lower percentage of deductions than those earning higher salaries. However, it is important to note there are fixed percentage rates for statutory contributions like Social Security and Medicare.