Reimbursement & Payment
Increasing a gross payment so that the net after tax matches the intended figure.
A gross-up increases the gross payment so that after tax withholding the net amount handed to the employee matches the intended figure. Used when a reimbursement falls into a non-accountable plan and the employer wants to absorb the tax hit. Typical cost: 30%–50% on top of the original amount, depending on the bracket.