What term describes amounts subtracted from gross pay?

• A. Withholdings
• B. Benefits
• C. Deductions
• D. Allowances

Answer: (C)

Deductions are the amounts subtracted from gross pay to arrive at take-home pay. This category includes both mandatory items like taxes and Social Security and Medicare, and voluntary ones like health insurance premiums or retirement contributions. The term uniquely captures the act of subtracting these amounts from gross pay. Withholdings refers more to the process of keeping back amounts to remit to third parties and is closely related, but deductions is the precise label for the subtractions themselves. Benefits describe perks that aren’t taken out of gross pay, and allowances are adjustments used to determine how much tax is withheld, not the actual subtraction from gross pay.