Examples of Calculation Factors for Payroll Deductions

To illustrate how the payroll run uses calculation factors to calculate different types of deductions, let's look at a social insurance deduction and a national income tax deduction using calculation steps.

Social Insurance Deduction

Employers in many countries or territories deduct social insurance payments from employees and also make contributions. Employee and employer rates are typically different. Such deductions often have wage limits.

The social insurance deduction processor element for this type of calculation might have the following calculation factors:

Employer or Employee Code (Reference Value)	Calculation Method	Calculation Step	Calculation Value Definition	Values
Employee	None	Calculate Social Insurance Employee Rate	Social Insurance Employee Rate	4 percent flat rate
Employer	None	Calculate Social Insurance Employer Rate	Social Insurance Employer Rate	2 percent flat rate
Employee	None	Calculate Social Insurance Employee Wage Limit	Social Insurance Employee Wage Limit	100,000 flat amount
Employer	None	Calculate Social Insurance Employer Wage Limit	Social Insurance Employer Wage Limit	100,000 flat amount

National Income Tax Deduction Using Calculation Steps

A national income tax calculation involves multiple steps. First, it calculates the allowance, then any exemption amount, and then it applies the tax rate.

The following table shows a subset of calculation factors that might be associated with a tax processor element.

Filing Status (Reference Value)	Calculation Method	Calculation Steps	Calculation Value Definition	Values
Single	None	Calculate Region A Allowance - Single	Region A Allowance - Single	10,000 flat amount
Single	None	Calculate Region A Exemption Amount - Single	Region A Exemption - Single	0 flat amount
Single	None	Calculate Region A Regular Rate - Single	Region A Rate - Single	7 percent flat rate
Married	None	Calculate Region A Allowance - Married	Region A Allowance - Married	10,000 flat amount
Married	None	Calculate Region A Exemption Amount - Married	Region A Exemption - Married	1,000 flat amount
Married	None	Calculate Region A Regular Rate - Married	Region A Rate - Married	6 percent flat rate