Tax planning for PPh 21 deductions on employee salaries is one of the efforts that can be made by a company to achieve tax burden efficiency. This research was conducted to find out how the PPh 21 mechanism on employee salaries at XYZ University and the tax planning that is applied is the selection of the PPh 21 deduction method to achieve tax efficiency. This type of research is qualitative with data acquisition techniques are interviews with the finance department of XYZ University. The data used are primary data, are data resulting from interviews and secondary data derived from books, journals, and other scientific sources to support the explanation of primary data. Based on research conducted, XYZ University deducts PPh 21 with a self-assessment system, where employees calculate, pay and report their tax payable through an application from the Ministry of Finance. For ASN the application used is Salary GPP, while for non-ASN PPNPN. Meanwhile, XYZ University uses two PPh 21 deduction methods, namely the gross-up method for ASN and the gross method for non-ASN. The gross-up method creates tax efficiency for employees and agencies with PPh 21 dependents by agencies with benefits from the government because XYZ University is a State University. Whereas the gross method creates efficiency for agencies because it doesn’t need to bear the burden of PPh 21 and doesn’t have significant impact on employee satisfaction because the majority of PKP Non-ASN are under the PTKP so that not subject to tax.