Gross-Up refers to the act of increasing an employee's compensation to cover the additional taxes or costs associated with a specific benefit or payment. It is commonly used when an employer provides a taxable benefit to an employee and wants to ensure that the employee receives the full value of the benefit after taxes.

Example

An employer provides a relocation allowance to an employee and chooses to gross up the amount to cover the taxes that the employee would incur on the relocation assistance, ensuring that the employee receives the full intended amount without any tax deductions.