Gross-up definition and meaning
A gross-up is money added to a payment to cover income taxes the recipient will owe. It is most often seen in executive compensation plans.
More about what a gross-up is used for
Companies sometimes pay employees and don’t realize that the check needs to be grossed up to cover taxes when running through payroll. A gross-up can also change the dollar amount that an individual receives. For example, if an employee expects a payment of $10,000 after taxes — the payment can be grossed up once tax is withheld — the employee will net $10,000.
Most of the time, a gross-up is can be used for one-time payments, such as reimbursements for employee relocation expenses or bonuses.
