To set up a new deduction, please do as follows:
Go to the Payroll module, Pay Element Setup.
Click New, key in the Pay Element ID and description, eg, Miscellaneous deduction.
Select Deduction, click Next.
Select None of the above, click Next.
Select Standard Deduction and select the Free method.
In the pay element property screen, remove Subject to Ordinary and Subject to SDF, and arrow over to the left.
In the left panel, select Non-Taxable Code, arrow over to the right, and Save.