Method · Federal
Withholding is a deposit on a tax. It is not the tax return.
Each paycheck, an employer holds back amounts the law assigns to the employee, adds the amounts the law assigns to the employer, and sends both to the agencies on a schedule. The employee’s income-tax return, months later, is where the income-tax withholding is reconciled. Social Security and Medicare do not work that way. They are mostly final when you withhold them.
Published · Updated
Income tax
From Form W-4 and Publication 15-T. It varies by person. We do not print a fake dollar amount for it.
Social Security
6.2% employee and 6.2% employer, on 2026 wages up to $184,500.
Medicare
1.45% each, on all wages. Plus 0.9% employee-only above $200,000 you pay that person.
State items
Only if that state imposes them. Florida and Texas do not add income-tax withholding. New York and California do.
The form that drives income-tax withholding
Employees give you Form W-4. The current form asks about filing status, whether the person holds more than one job, dollar amounts for dependents and other adjustments, and any extra withholding. It does not ask for a number of allowances. If a new hire hands you a pre-2020 form, give them the current W-4. If they refuse to provide one, Publication 15 tells you to withhold as if they were single, or the current equivalent status in the publication, with no adjustments. Do not negotiate a rate in the hallway.
Publication 15-T is the method book. It has percentage methods and wage-bracket tables for each pay frequency. A weekly table used on a biweekly payroll will withhold the wrong amount all year. Match the table to the period you actually pay. When the IRS revises the publication for a new year, switch on the first payroll paid in that year.
Nonresident alien employees have an extra step in Publication 15. Do not skip it because the W-4 looks ordinary. The publication tells you how to adjust the calculation.
Supplemental wages
Bonuses, commissions, overtime (if you treat it as supplemental), severance, and taxable fringe benefits can be supplemental wages. Publication 15 for 2026 keeps the flat rate at 22% when supplemental wages paid to the employee during the year are $1 million or under, if you already withhold income tax from regular wages. Above $1 million, the rate on the excess is 37%, without regard to the W-4. You may instead add the supplemental pay to regular wages and compute withholding on the total, then subtract tax already withheld.
If you pay the bonus in the same check and you do not show the split, withhold as if the whole amount were an ordinary paycheck. Social Security, Medicare, and FUTA still apply to supplemental wages, subject to their wage bases. A flat 22% income-tax rate does not replace the 6.2% and 1.45%.
State supplemental rates are independent. New York’s flat supplemental rate for 2026 is 11.70% in the situation the Tax Department describes. California publishes its own. Using 22% for every column is how a bonus gets withheld twice wrong.
Worked month · employee side
Gross pay $4,000
One monthly paycheck. Wages for the year are still under $184,500 and under $200,000. No pre-tax deduction in this example. Income tax is left as a label, because it depends on the W-4.
| Social Security 6.2% | $248.00 |
|---|---|
| Medicare 1.45% | $58.00 |
| Additional Medicare | $0.00 |
| Federal income tax | From Pub. 15-T |
| Employer Social Security | $248.00, not deducted |
| Employer Medicare | $58.00, not deducted |
Employee FICA in this example is $306.00. Your matching FICA is another $306.00. Net pay equals $4,000 minus $306.00 minus whatever Publication 15-T and any state rule withhold.
After the wage base
Once taxable Social Security wages for 2026 reach $184,500, stop the 6.2% on both sides for later pay. Keep withholding Medicare and income tax. Keep the 0.9% Additional Medicare tax going if you have already crossed $200,000 paid by you. A mid-year hire who earned $184,500 at a previous employer still pays Social Security on the wages you pay, up to a fresh $184,500 with you. The wage base is per employer for withholding, with a reconciliation on the employee’s own return if the combined wages went over the base.
Deposits, then the return
Publication 15 divides employers into monthly and semi-weekly depositors using a lookback at the tax reported for a four-quarter period that ended the previous 30 June. A tax liability of $100,000 or more on a single day forces a next-day deposit. The schedule tells you when the money moves. Form 941 tells the IRS what happened in the quarter. Filing the form is not a substitute for the deposit, and an on-time deposit does not cancel the form. If you are a new employer, Publication 15 assigns a schedule until you have a lookback. Read that paragraph. Do not inherit the schedule of a payroll company you have not hired.
FUTA is easy to forget because it is not on the pay stub. It is 6.0% of the first $7,000, before a credit of up to 5.4% for state unemployment tax paid in full and on time. Deposit FUTA when the quarterly liability crosses the threshold in the Form 940 instructions, and file Form 940 once a year. State unemployment tax is a separate check to the state.
A short glossary
- Gross pay
- Wages before taxes and deductions. Most payroll taxes start here, then subtract pre-tax items the statute allows.
- Taxable wages
- The part of gross pay that a named tax applies to, after that tax’s own exclusions and before its wage base cuts it off.
- Withholding
- The employee’s share, taken from the paycheck and held by you until you deposit it. It is the employee’s money in legal theory and your liability in practice if you do not send it.
- Employer tax
- Your share. Social Security match, Medicare match, FUTA, and most state unemployment taxes. Do not subtract these from net pay.
- Deposit schedule
- The IRS rule for when a federal employment-tax liability must reach EFTPS. It is not the Form 941 due date.
- Wage base
- The annual maximum of wages subject to a tax. For 2026, $184,500 for Social Security and $7,000 for FUTA. Medicare has none.
Take these rules into a state: Florida, New York, California, or Texas. The year’s filing dates are on the calendar.