Payroll Deductions

Payroll Deductions

Payroll deductions are amounts withheld from an employee’s payroll check (or wages), and these amounts are withheld by their employer. In Barbados, these deductions are ordinarily Taxes and National Insurance Scheme Contributions.

We’ll use the following simple examples to demonstrate how payroll deductions impact your earnings. Jane Doe is single, with no children. She is a Legal Secretary with a law firm, Clarke & Davidson. Her annual, gross salary (before deductions) is BDS$75,000.  Let’s look at Jane Doe’s monthly earnings.

 Pay As You Earn (PAYE) Tax

  1. Jane Doe’s first $25,000 earned is tax-free.
  2. The next $35,000 earned is taxed at 16%. This is equivalent to $5,600 in annual deductions.
  3. Her remaining $15,000 is taxed at 33.5%. This is equivalent to $5,025 in annual deductions.

Jane Doe’s total PAYE payroll deductions will be $10,625. Her monthly PAYE payroll deductions are $885.42.

National Insurance Scheme Contributions

Private Sector Employees must contribute 10.1% of their earnings up to $4,650 (max) per month. This equates to $469.65 in monthly payroll deductions for contributions to the scheme.

Monthly Salary 

Before payroll deductions, Jane’s gross monthly salary is $6,250. After payroll deductions, her net monthly salary is $4,894.93. Jane’s monthly payroll deductions amount to $1,355.07.

It is important that you the Employee understand the impact of payroll deductions on your discretionary (net) income and understand how to calculate these. To learn more about NIS and PAYE visit the following links: