How is Withholding Calculated?

Understanding Withholding Calculations

Withholding is the amount of income tax that your employer deducts from your paycheck and sends to the government on your behalf. The amount of withholding is calculated based on several factors, including:

  • Your earnings
  • Your filing status
  • The number of allowances you claim on your W-4 form


The first factor that affects withholding is your earnings. The more you earn, the more taxes you will have withheld. This is because the tax rates are progressive, meaning that they increase as your income increases.

Filing Status

Your filing status also affects withholding. There are five different filing statuses:

  • Single
  • Married filing jointly
  • Married filing separately
  • Head of household
  • Qualifying widow(er)

The filing status you choose will determine the standard deduction and tax rates that apply to you. These factors will, in turn, affect the amount of withholding.


The final factor that affects withholding is the number of allowances you claim on your W-4 form. Allowances are deductions that reduce the amount of taxes withheld from your paycheck. The more allowances you claim, the less taxes will be withheld.

Calculating Withholding

To calculate withholding, your employer will use the following formula:

Withholding = (Taxable income - (Allowances x Standard deduction)) x Tax rate


Let’s say you are single and earn $50,000 per year. You claim two allowances on your W-4 form. The standard deduction for single filers in 2023 is $13,850.

Your taxable income would be:

$50,000 - (2 x $13,850) = $22,300

The tax rate for taxable income between $10,275 and $41,775 is 12%.

Your withholding would be:

$22,300 x 0.12 = $2,676

This means that your employer would withhold $2,676 from your paycheck over the course of the year.

Changing Withholding

You can change your withholding at any time by submitting a new W-4 form to your employer. You may want to change your withholding if your income or filing status changes.

Withholding is a complex topic, but it is important to understand how it works. By understanding the factors that affect withholding, you can make sure that the correct amount of taxes is being withheld from your paycheck.

Calculating Federal Income Tax Withholding


How do employers determine tax withholding?

Employers generally must withhold federal income tax from employees’ wages. To figure out how much tax to withhold, use the employee’s Form W-4, Employee’s Withholding Certificate, the appropriate method and the appropriate withholding table described in Publication 15-T, Federal Income Tax Withholding Methods.

What percentage do I withhold for taxes?

Taxable income
Taxes owed
$0 to $23,200
10% of the taxable income
$23,201 to $94,300
$2,320 Plus 12% of the amount over $23,200
$94,301 to $201,050
$10,852 Plus 22% of amount over $94,300
$201,051 to $383,900
$34,337 Plus 24% of amount over $201,050

How is withholding allowance calculated?

If the Form W-4 is used for California withholding purposes, compute the tax to be deducted and withheld based on the total number of withholding allowances claimed on line 5 of Form W-4; minus the number of additional allowances for estimated deductions claimed.

What is a federal tax withholding calculator?

The federal tax withholding calculator, or W-4 calculator, helps you determine how much federal income tax should be withheld from your pay. It considers your filing status, income, dependents, and more to estimate your yearly tax and suggest W-4 allowances.

How do I calculate my withholding tax?

You can calculate your withholding tax by using the IRS Withholding Estimator. In order to get an accurate figure, you’ll need some basic information. Be sure to have the following handy when you’re filling out the online form: The amount of federal income tax per pay period and the total paid year-to-date

How much is my withholding tax?

The amount of your withholding tax depends on the income type and information you provide via IRS Form W-4 (“Employee’s Withholding Tax Certificate”), such as: Typically, you don’t need to manually calculate your withholding tax. The IRS has taken some of the guesswork out of the process by creating a tax withholding estimator.

What is the tax withholding estimate?

The Tax Withholding Estimator compares that estimate to your current tax withholding and can help you decide if you need to change your withholding with your employer. More details about the Tax Withholding Estimator and the latest withholding tables can be found on Tax Withholding Estimator FAQs.

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