Taxable income for payroll purposes is the portion of an employee's compensation subject to federal, state, or local income tax. It includes wages, salary, bonuses, commissions, taxable benefits (group term life over $50,000, personal use of company car), and most other forms of compensation. It excludes pre-tax benefit deductions (401(k), HSA, FSA, qualified transit), employer-paid health insurance premiums, and certain other statutory exclusions.
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