Are you getting any kind of message stating why the code is not deleting?

No, the item is just greyed out. This is under employee maintenance deductions. 

In Payroll 2.xx, if a deduction,has history in a prior year it cannot be deleted from the employee. Why do you need to delete it?  

Payroll clerk data entry error on last pay period of 2020, for a new employee. Actual issues were corrected and amounts refunded/credited to employee. Payroll wants to make the correction. I suggested zero out the deduction and input the correct code. 

I have the same issue other than the Tax rule was setup incorrectly, so we are just making new Deduction Codes and need to make to other one inactive so that it is not accidently picked when adding a new employee.  what do you suggest.

You might try in a test company - reverse the check using the wrong tax code.  Update, change the deduction code to have the correct tax code and renter the entry.  Might prevent a second code.