The Wage Bracket Percentage Method Tables show the gross
wage brackets that apply to each withholding percentage rate for
employees with up to nine withholding allowances. These tables also
show the computation factors for each number of withholding allowances
and the applicable wage bracket. The computation factors are used to
figure the amount of withholding tax by a percentage method.
Two kinds of Wage Bracket Percentage Method Tables are
shown. Each has tables for married and single persons for weekly,
biweekly, semimonthly, and monthly payroll periods.
The difference between the two kinds of tables is the reduction
factor subtracted from wages before multiplying by the applicable
percentage withholding rate. In the tables for Computing Income
Tax Withholding From Gross Wages on pages 29-32, the
reduction factor includes both the amount for withholding allowances
claimed and a rate adjustment factor as shown in the Alternative
2--Tables for Percentage Method Withholding Computations on
page 27. In the tables for Computing Income Tax Withholding From
Wages Exceeding Allowance Amount on pages 33-36, the
reduction factor does not include an amount for the number of
allowances claimed.
Use the kind of wage bracket table that best suits your payroll
system. For example, some pay systems automatically subtract from
wages the allowance amount for each employee before finding the amount
of tax to withhold. The tables for Computing Income Tax
Withholding From Wages Exceeding Allowance Amount can be used in
these systems. The reduction factors in these tables do not include
the allowance amount that was automatically subtracted before applying
the table factors in the calculation. For other systems that do not
separately subtract the allowance amount, use the tables for
Computing Income Tax Withholding From Gross Wages.
When employers use the Wage Bracket Percentage Method Tables,
the tax for the period may be rounded to the nearest dollar. If
rounding is used, it must be used consistently. Withheld tax amounts
should be rounded to the nearest whole dollar by (1) dropping amounts
under 50 cents and (2) increasing amounts from 50 to 99 cents to the
next higher dollar. Such rounding will be deemed to meet the
tolerances under section 3402(h)(4).
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