withholding tax

noun

: a deduction (as from wages, fees, or dividends) levied at a source of income as advance payment on income tax

Examples of withholding tax in a Sentence

Recent Examples on the Web

Under the Foreign Account Tax Compliance Act (FATCA), Washington requires foreign financial institutions to disclose their American clients’ financial information to the U.S. Treasury and imposes a 30 percent withholding tax on certain payments to foreign financial institutions that don’t comply. —Nicholas Shaxson, Foreign Affairs, 13 Feb. 2018

Palestinian leaders say its ability to exercise effective governance has been effectively blocked by Israeli restrictions, which have included withholding tax revenues due under the Oslo accords. —Ali Sawafta, The Christian Science Monitor, 26 Feb. 2024

The legislation lifts the current $800 million limit on the total amount of capture income and withholding tax revenues to $1.6 billion. —Detroit Free Press, 18 July 2023

The release of $600,000 in withholding tax tied to unrepatriated earnings of its Russian subsidiary increased its tax rate, Kevin Daniels, the company’s chief accounting officer, said in a June 2 letter. —Mark Maurer, WSJ, 26 July 2022

Word History

First Known Use

1940, in the meaning defined above

Kids Definition

withholding tax

noun

: a deduction (as from one's wages) taken at a source of income (as one's employer) as an advance payment of income tax

Legal Definition

withholding tax

noun

with·​hold·​ing tax

: a deduction (as from wages, fees, or dividends) levied at a source of income as advance payment on income tax