In a legal context, withholding is the action of deducting an amount or percentage established by the law from a person’s income, like from wages or dividends. Commonly, the withholding is made and subsequently paid to the government by the withholding party (e.g., the employer who withholds from the employee and pays it to the IRS).
See also: income tax; Internal Revenue Code
[Last updated in July of 2024 by the Wex Definitions Team]