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Reviewed by PayslipIQ Editorial Team, in-house payroll editor
Last reviewed May 2026 · Editorial standards on methodology

Federal Income Tax Withholding

The federal income tax line on your pay stub is a prepayment to the IRS for the tax year. Your employer calculates it from your W-4 using IRS Publication 15-T tables. It is not your final tax bill, that gets settled when you file.

PayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, accounting, employment, benefits, or payroll advice. PayslipIQ is not a CPA firm, law firm, financial advisor, payroll provider, or tax authority. Always verify your paycheck, deductions, withholdings, and tax position with your employer's payroll department, a qualified CPA, the IRS, your state tax authority, or another appropriately qualified professional. Calculations are estimates; your actual paycheck may differ based on factors specific to your employer, location, benefits elections, and personal tax situation.

The mechanics

Your employer takes a portion of your gross pay each period and sends it to the IRS as your prepayment. At year-end, you reconcile via your tax return: if you over-withheld, you get a refund. If you under-withheld, you owe.

What drives the amount

  • Filing status (single, married filing jointly, head of household)
  • Annual gross wages projected forward from this paycheck
  • Step 2 of W-4 (multiple jobs / spouse works)
  • Step 3 dependents claimed
  • Step 4(a) other income to add
  • Step 4(b) deductions to subtract
  • Step 4(c) extra flat-dollar withholding per period

The 2026 federal brackets (single, simplified)

  • 10 percent on income up to $11,925
  • 12 percent up to $48,475
  • 22 percent up to $103,350
  • 24 percent up to $197,300
  • 32 percent up to $250,525
  • 35 percent up to $626,350
  • 37 percent above

MFJ brackets are roughly double at the lower end. Verify current numbers at irs.gov.

Withholding versus tax owed

Withholding is a calculation. Tax owed is determined when you file your return using all your income, deductions, credits and dependents. The two often differ. The annual reconciliation closes the gap.

Supplemental wages

Bonuses, commissions, severance, and back pay are supplemental wages. Most employers withhold them at the federal supplemental rate (22 percent up to $1M annually, 37 percent above). Some use the aggregate method instead. Either way, the actual tax owed is settled when you file.

Pre-tax deductions

401(k), HSA, FSA, Section 125 health insurance reduce federal income tax wages (the amount the calculation runs against). Higher pre-tax deductions = lower federal withholding.

Adjusting your withholding

Run the IRS Tax Withholding Estimator at irs.gov. If under-withheld, increase Step 4(c) extra withholding. If over-withheld, decrease Step 4(c) or claim more dependents in Step 3 if appropriate. Submit a new W-4 to your employer when changes are needed.

Frequently asked questions

How is federal withholding calculated?
Using IRS Publication 15-T tables. Inputs are your W-4 (filing status, multiple jobs, dependents, additional income, deductions, extra withholding) and your annualized gross from this paycheck.
Why does my withholding change between paychecks?
Pay frequency changes, bonus or supplemental wage paid in one period, mid-year W-4 update, mid-year benefits change, or YTD wages crossing certain thresholds.
Is withholding my actual tax?
No, it is a prepayment. Tax owed is settled when you file your return. If you over-withhold, you get a refund. Under-withhold and you owe.
How do I lower my federal withholding?
Submit a new W-4 with adjusted dependents (Step 3) or a smaller Step 4(c) extra-withholding amount. Use the IRS Tax Withholding Estimator to dial it in.
Why is my bonus withheld at 22 percent?
Federal supplemental rate. Applies to bonuses, commissions, severance, back pay up to $1M annually. 37 percent above. The 22 percent is withholding, not your actual tax rate.

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