withholding
with-HOHL-ding
/wɪðˈhəʊldɪŋ/
The practice of deducting tax from an employee's pay and paying it directly to the government.
Withholding acts as a pay-as-you-go system, preventing taxpayers from facing a massive, unpayable bill at the end of the year.
The story behind the word. Formed from the Old English prefix 'wið' (meaning 'against' or 'away') and 'healdan' (to hold). It literally means to hold something back from being given or released.
Word relationships
- deduction: Deduction is any subtraction from income, while withholding is specifically the tax subtracted by an employer and sent to the government.
- disbursement: Disbursement is the act of paying out money, whereas withholding is keeping money back.
Commonly confused with
- withholding tax: Withholding is the action of holding back the money; withholding tax is the actual tax category being held.
Word family
- withhold (verb): To refuse to give or to hold back.
Collocations
- tax withholding
- withholding allowance
- withholding rate
- withholding tax
Example sentences
- "Her employer adjusted her tax withholding after she updated her W-4." Payroll Setup
Memory hook
The government is 'holding' your money 'with' them until tax season. Holding back tax from your paycheck.
When not to use
Do not confuse with 'withholding' in a psychological sense (like withholding affection), though the core meaning of holding back is the same.
Fun facts
- The modern system of tax withholding was introduced in the United States during World War II under the Current Tax Payment Act of 1943 to ensure a steady stream of revenue for the war effort.
Explore more words
withdrawal, salary, withdraw, forbearing, reimbursement, insurance
Also appears in
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