Learn how to set up voluntary deductions in your online Payroll account.
Voluntary payroll deductions are amounts subtracted from an employee's net pay to cover the cost of things such as employee-paid benefits offered by the employer, or general deductions like a charitable donation.
Note: Pretax deductions must come out of a taxable wage item. They will not deduct from a reimbursement type wage.
For deductions such as retirement plans, health insurance, HSA plans, or FSA, your provider can help you decide on the amount to be withheld and determine the taxability.
Deduction vs Contribution
A deduction is an amount paid by an employee and deducted from each paycheck. A contribution is paid by the employer and often counts as additional pay or wages.
For example, an employee and an employer might pay some part of the cost for a health insurance plan. The employee-paid portion is called a deduction. The portion paid by the employer is called a contribution.
Learn about the types of voluntary deductions
Voluntary payroll deductions include medical, dental, and vision insurance premiums (both pretax and post-tax). Garnishments are not voluntary deductions.
The chart below explains which deductions are supported in QuickBooks Online Payroll.
For the taxability of each deduction, see Supported pay types and deductions explained for more details.
| Category | Types |
| Health Insurance | Medical, Dental, or Vision Insurance |
| Retirement Plans | 401(k), SIMPLE 401(k), 403(b) , SARSEP, SIMPLE IRA, Company-only plan, Roth 401(k), Roth 403(b), and catch-ups |
| FSA Plans | Dependent Care FSA** and Medical Expense FSA |
| HSA Plans | Taxable HSA and Pretax HSA |
| Other Deductions | Cash Advance Repayment, Loan Repayment, other after-tax deduction |
Note: We don't support the Dependent Care FSA in Pennsylvania.
Set up a new deduction item to employees
Add a deduction item for your employees. Once a deduction is set up for one employee, this deduction item appears as an option to select when adding a deduction to the rest of your employees.
QuickBooks Online Payroll
- Select Workers, then Employees.
- Select the employee's name.
- Select Edit ✎ next to Pay.
- In section 5, select + Add a new deduction or + Add deductions.
- From the Deductions/contributions ▼ dropdown menu, choose New deduction/contribution.
- Choose a Deduction type and Type from the small arrow ▼ icon.
- Enter Provider name(appears on paycheck).
- From the Amount per pay period ▼icon, choose $ amount or % of gross pay and enter the $ amount or percentage. Do the same for the Company-paid contribution as applicable.
- Select OK, then Done.
Intuit Online Payroll Full Service
Contact us to connect with a payroll support.
Intuit Online Payroll Enhanced
- Employees and select the employee's name.
- In the Deductions & Contributions section, select Edit.
- In the Deduction for Benefits section, select Add a Deduction.
- From the Deduction▼dropdown menu, select New deduction.
- Choose a Category and Type.
- Add a Description(appears on paycheck).
- Enter a $ amount or % of Gross Pay.
- Select Save, then OK.
Assign a deduction item to employees
You can add the same deduction you've set up to an employee to other employees by assigning it to them.
QuickBooks Online Payroll
- Select Workers, then Employees.
- Select an employee from the list.
- Select Edit ✎ next to Pay.
- In section 5, select + Add a new deduction or + Add deductions.
- From the Deductions/contributions ▼ dropdown menu, select the existing deduction you want to assign for your employee.
- From the Amount per pay period ▼icon, choose $ amount or % of gross pay and enter the $ amount or percentage. Do the same for the Company-paid contribution as applicable.
- Select OK, then Done.
Intuit Online Payroll Full Service
Note: For Intuit Full Service Payroll customers, if this is a new deduction, contact us to set up a deduction.
- Select Employees.
- Select an employee from the list.
- In the Deductions and Contribution section, select Edit.
- Select Add new deduction or contribution.
- In the new window, select the name of the deduction you'd like to add.
- As applicable, define the per-pay period deduction and annual maximum for the deduction you're adding. Do the same for your company's contribution.
- Select Done.
Intuit Online Payroll Enhanced
- Go to Employees.
- In the Deductions and Contributions section, select Edit.
- Select Add a deduction.
- From the Deduction ▼ dropdown menu, the existing deductions shows up. Select a deduction for your employee.
- As applicable, define the Amount per pay period and annual maximum for the deduction you're adding. Do the same for your company's contribution.
- Select Save, then OK.
Understanding deduction guidelines
Retirement plan deductions and contributions
There are retirement plan contributions that are tax-deferred. This means that the employees' wages are reduced by the amount of the contribution before certain taxes are calculated.
See Retirement plan deductions and contributions for more details.
Cafeteria plans (Section 125 plans) and flexible spending accounts
If you have a cafeteria plan (also known as a Section 125 plan), your employees can pay medical, dental, and vision insurance premiums with pretax paycheck deductions.
See Section 125 cafeteria plans for more details.
Health Savings Account contributions and limits
An employee is eligible to set up a health savings account (HSA) if they satisfy all federal requirements, such as participating in a high-deductible health plan (HDHP). Both you and the employee can contribute to their HSA.
See Set up Health Savings Account (HSA) plans for more details.
