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How to Use the Percentage Method Withholding Tables With Forms W-4 From 2020 or Later

Author: Alice Gilman

An employer must withhold federal income taxes from its employees' pay every pay period. The IRS provides several methods an employer can use to fulfill this duty. The percentage method of withholding is most commonly used by employers with an automated payroll system and third-party payroll service providers. The percentage method withholding tables and worksheets are issued before a calendar year ends, to be used by employers in the following year. The IRS publishes the percentage method withholding tables and worksheets in IRS Publication 15-T, Federal Income Tax Withholding Methods.