Tax Withholding Calculation Calendar Year 2008
The examples shown below are for illustration of the taxes to be withheld and the effect of the number of withholding allowances claimed. A gross payment amount of $10,000 is used in these two examples. For federal tax calculations, $3,500 is subtracted from the gross payment amount for every one withholding allowance. State tax is then calculated on the remaining amount. There are examples for both a married and a single taxpayer with withholding allowances of 0 or 2. Also shown is an example using the flat tax withholding rates of 25% for federal and 6% for state.
Married
Withholding Allowances Federal Tax Withheld State Tax Withheld 0 200.00 210.00 2 0.00 110.00
Flat Rate
(code of “99”)
2,500.00 450.00
Single
Withholding Allowances Federal Tax Withheld State Tax Withheld 0 735.00 186.00 2 35.00 108.00
Flat Rate
(code of “99”)
2,500.00 450.00
The actual federal table used in the calculation of withholding for annual payments is shown below:
Federal Tables for Percentage Method of Withholding
ANNUAL Payroll Period (For Wages Paid Through December 2008)
One withholding allowance amount for an annual payroll period is $3,500.00. This amount is multiplied by the number of withholding allowances you have identified on your federal W-4. That number is then subtracted from your gross payment amount, and the result of that calculation is used in the table shown below to calculate the federal tax to be withheld. SINGLE person (including head of household) If the amount of wages (after subtracting withholding allowances) is:
Not over $2,650 . . . . . . . . Over $2,650 $10,300 $33,960 $79,725 $166,500 $359,650 But not over $10,300 . . . $33,960 . . . $79,725 . . . $166,500 . . $359,650 . . ........ .
MARRIED person If the amount of wages (after subtracting withholding allowances) is:
Not over $8,000 . . . . . . . . . $0
The amount of income tax to withhold is:
$0
The amount of income tax to withhold is:
Of excess over10% $765.00 plus 15% $4,314.00 plus 25% $15,755.25 plus 28% $40,052.25 plus 33% $103,791.75 plus 35% $2,650 $10,300 $33,960 $79,725 $166,500 $359,650
Over $8,000 $23,550 $72,150 $137,850 $207,700 $365,100
But not over $23,350 . . . $72,150 . . . $137,850 . . . $207,700 . . . $365,100 . . . ............
Of excess over10% $1,555.00 plus 15% $8,845.00 plus 25% $25,270.00 plus 28% $44,828.00 plus 33% $96,770.00 plus 35% $8,000 $23,500 $72,150 $137,850 $207,700 $365,100