Federal Income Tax Withholding

Federal income tax withholding is the income tax your employer takes from each paycheck and pays to the IRS on your behalf. The amount comes from your pay, your Form W-4 and the IRS withholding tables.

Employers follow IRS Publication 15-T. In effect they annualize your taxable wages, take off the standard deduction for your filing status, apply the tax brackets and subtract W-4 credits. Pay stubs usually shorten it to FIT or Fed WH.

Withholding is a prepayment, settled when you file. State and local income tax withholding follow their own rules. See what withholding tax is and how much federal tax should be withheld. The methodology page shows the full formula.

To calculate federal income tax on a paycheck, run your taxable wages, filing status and Form W-4 through the IRS Publication 15-T percentage method. A single filer earning $60,000 a year and paid every two weeks has $193.08 of federal income tax withheld from each $2,307.69 paycheck, with a standard W-4 and no pre-tax deductions.

The steps are: annualize the gross ($2,307.69 x 26 = $60,000), subtract the standard deduction for your filing status, apply the federal brackets, then divide the year's tax by 26 pay periods. Social Security and Medicare are figured separately and add $176.54 to that same check, $143.08 for Social Security and $33.46 for Medicare.