TAXES 20-01, U.S. Federal Income Tax Withholding

Published: January 10, 2020
Effective: Pay Period 26, 2019

Summary

The United States Federal income tax withholding formula includes the following changes:

The valid marital status values will change for Internal Revenue Service (IRS) Form W-4, Employee's Withholding Certificate submitted 2020 or later. Married Filing Separately and Married Filing Jointly are now valid marital statuses.
The tax tables will change. There are six tax tables: three standard (Single, Married Filing Jointly, and Head of Household) and three higher (Single, Married Filing Jointly, and Head of Household) tax tables.
The tax is calculated differently based on whether the 2020 or later Form W-4 applies or whether the Form W-4 prior to 2020 applies.
Note: Form W-4 2020 or later applies to all employees hired after 2019, even if no form is submitted. Employees hired after 2019 cannot submit a Form W-4 dated prior to 2020.

Employees who intend to claim total Federal tax exemption for the calendar year (CY) 2020 must submit a new Form W-4 prior to February 16, 2020. Effective Pay Period 04, 2020, employees who claimed total exemption for CY 2019 and who have not filed a new Form W-4 for CY 2020 will have Federal taxes withheld as single taxpayers with zero withholding allowance. A Form W-4 filed for the prior year does not extend tax exemption into CY 2020. A new Form W-4 must be filed for CY 2020.

2020 or Later:

The following changes apply based on Form W-4 2020 or later:

Employees claiming Single or Married Filing Separately will use the Single tax tables. Employees claiming Married Filing Jointly will use the Married Filing Jointly tax tables. Employees claiming Head of Household will use the Head of Household tax tables.
Note: For 2020 or later, Single and Married Filing Separately will both be coded as filing status MS.

Married Filing Jointly will be coded as filing status MJ.

Head of Household will be coded as filing status HH.
In addition to the marital status, the checkbox on step 2 of Form W-4 determines which tax table applies. If box 2 is checked, tax is calculated using the higher tax tables. Otherwise, the standard tax tables are used.
For withholding based on a 2020 or later Form W-4, the annual amount to add to a non-resident alien's (NRA) taxable wages prior to calculating withholding is $12,400.
The exemption amount is no longer based on the number of withholding allowances claimed. The exemption amount is:
- $0 for employees who check the box in step 2 on Form W-4;
- $12,900 for employees who claim Married Filing Jointly and do not check the box in step 2 on Form W-4; and
- $8,600 for all other employees.
A Dependent tax credit has been added to decrease the tax amount withheld based on the amount entered in step 3 of Form W-4.
An Other Income wage adjustment has been added to increase taxable wages for withholding purposes based on the amount entered in step 4a of Form W-4.
A Deductions wage adjustment has been added to decrease taxable wages for withholding purposes based on the amount entered in step 4b of Form W-4.
If an employee hired after 2019 does not submit a valid Form W-4, tax is withheld based on Single filing status with no adjustments to income or taxes. An exception applies to employees who are NRA. The NRA adjustment to annual taxable wages still applies.

Prior to 2020:

The following changes apply based on Form W-4 prior to 2020:

For withholding based on Form W-4 prior to 2020, the annual amount to add to an NRA's taxable wages prior to calculating withholding has changed from $8,000 to $8,100.
Employees claiming Single or Head of Household will use the Standard Single tax table. Employees claiming Married will use the Standard Married Filing Jointly tax table. The Head of Household tax tables do not apply based on Form W-4 prior to 2020.
Note: Prior to 2020, Single and Head of Household will all be coded as filing status MS.

Married will be coded as filing status MJ.
The Standard tax tables are used to calculate tax based on the employee's marital status.
The exemption amount per withholding allowance claimed has changed from $4,200 to $4,300.

Tax Formula

Acceptable Exemption Form:	W-4
Basis for Withholding:	Prior to 2020 Marital Status and Federal Exemptions 2020 or Later Marital Status and Steps 2-4 on Form W-4
Acceptable Exemption Data:	Prior to 2020 MS, MJ, Number of Allowances 2020 or Later MS, MJ, HH and Steps 2-4 on Form W-4 prior to 2020
TSP Deferred:	Yes
Special Coding:	Prior to 2020 Exemption Code NR is the only acceptable code for NRA. Determine the Total Number of Allowances as follows: Claim only one allowance, unless a resident of Canada, Mexico, South Korea, or a United States national. If the Form W-4 is prior to 2020, then the filing status of Single and Head of Household will all select the MS filing status value. Similarly, the filing status of Married will select the MJ filing status value. 2020 or Later Non-resident aliens are not eligible to claim the child tax credit or credit for other dependents in step 3 of Form W-4 (if the NRA is a resident of Canada, Mexico, or South Korea, or a student from India, or a business apprentice from India, they may claim, under certain circumstances (see Notice 1392, Supplemental Form W-4 Instructions for Non-resident Aliens), the child tax credit or credit for other dependents).

Withholding Formula (Effective Pay Period 26, 2019)

Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
Subtract the nontaxable biweekly Federal Employee Health Benefits Plan payment(s) (includes dental and vision insurance program, and flexible spending account-health care and dependent care deductions) from the amount computed in step 1.
Add the taxable biweekly fringe benefits (e.g., taxable life insurance) to the amount computed in step 2 to obtain the adjusted gross biweekly wages.
Multiply the adjusted gross biweekly wages by the number of pay dates in the tax year to obtain the gross annual wages.

If the employee is an NRA, add the amount from the table below based on Form W-4 status.

Form W-4 Status	Amount
Employee hired before 2020 and has not submitted a 2020 or later Form W-4	$8,100
Employee hired in 2020 or later; or employee has submitted a 2020 or later Form W-4	$12,400

If the employee has submitted a 2020 or later Form W-4, then add the annual Other Income claimed in step 4a of the Form W-4.
If the employee has submitted a 2020 or later Form W-4, then subtract the annual deductions claimed in step 4b of the Form W-4.
Note: If the result is less than zero, the Adjusted Annual Wage Amount is zero.

Subtract the wage exemption amount from the table below based on Form W-4 status.

Form W-4 Status:	Amount:
Employee has not submitted a 2020 or later Form W-4.	Multiply the number of withholding allowances claimed on previous Form W-4 by $4,300.
Employee submitted a 2020 or later Form W-4 and the step 2 box is checked on the Form W-4.	$0
Employee has submitted a 2020 or later Form W-4, the step 2 box is not checked on the Form W-4, and the marital status is Married Filing Jointly.	$12,900
Employee has submitted a 2020 or later Form W-4, the step 2 box is not checked on the Form W-4 and the marital status is NOT Married Filing Jointly.	$8,600

Note: If the result is less than zero, the Adjusted Annual Wage Amount is zero.

Apply the taxable income computed in step 8 to one of the tables below to determine the Federal income tax withholding.

The Standard Single Tax Table is used for employees who have:

not submitted a 2020 or later Form W-4 and claim Single or Head of Household.
OR

submitted a 2020 or later Form W-4, claim Single or Married Filing Separately, and did not check the box in step 2 of the IRS Form W-4 (to view the IRS Form W-4, including tables and worksheets).

Standard Single Tax Table

If the Amount of Taxable Income Is:	The Amount of Federal Income Tax Withholding Should Be:
Over $0 but not over $3,800	$0
Over $3,800 but not over $13,675	$0 plus 10.0% of excess over $3,800
Over $13,675 but not over $43,925	$987.50 plus 12.0% of excess over $13,675
Over $43,925 but not over $89,325	$4,617.50 plus 22.0% of excess over $43,925
Over $89,325 but not over $167,100	$14,605.50 plus 24.0% of excess over $89,325
Over $167,100 but not over $211,150	$33,271.50 plus 32.0% of excess over $167,100
Over $211,150 but not over $522,200	$47,367.50 plus 35.0% of excess over $211,150
Over $522,200	$156,235.00 plus 37.0% of excess over $522,200

The Standard Married Filing Jointly Tax Table is used for employees who have:

not submitted a 2020 or later Form W-4 and claim Married.
OR

submitted a 2020 or later Form W-4, claim Married Filing Jointly, and did not check the box in step 2 of the IRS Form W-4 (to view the IRS Form W-4, including tables and worksheets).

Standard Married Filing Jointly Tax Table

If the Amount of Taxable Income Is:	The Amount of Federal Income Tax Withholding Should Be:
Over $0 but not over $11,900	$0
Over $11,900 but not over $31,650	$0 plus 10.0% of excess over $11,900
Over $31,650 but not over $92,150	$1,975.00 plus 12.0% of excess over $31,650
Over $92,150 but not over $182,950	$9,235.00 plus 22.0% of excess over $92,150
Over $182,950 but not over $338,500	$29,211.00 plus 24.0% of excess over $182,950
Over $338,500 but not over $426,600	$66,543.00 plus 32.0% of excess over $338,500
Over $426,600 but not over $633,950	$94,735.00 plus 35.0% of excess over $426,600
Over $633,950	$167,307.50 plus 37.0% of excess over $633,950

Use the table below for employees who have submitted a 2020 or later Form W-4, claim Head of Household, and did not check the box in step 2 of the IRS Form W-4 (to view the IRS Form W-4, including tables and worksheets).

Standard Head of Household Tax Table

If the Amount of Taxable Income Is:	The Amount of Federal Income Tax Withholding Should Be:
Over $0 but not over $10,050	$0
Over $10,050 but not over $24,150	$0 plus 10.0% of excess over $10,050
Over $24,150 but not over $63,750	$1,410.00 plus 12.0% of excess over $24,150
Over $63,750 but not over $95,550	$6,162.00 plus 22.0% of excess over $63,750
Over $95,550 but not over $173,350	$13,158.00 plus 24.0% of excess over $95,550
Over $173,350 but not over $217,400	$31,830.00 plus 32.0% of excess over $173,350
Over $217,400 but not over $528,450	$45,926.00 plus 35.0% of excess over $217,400
Over $528,450	$154,793.50 plus 37.0% of excess over $528,450

Use the table below for employees who have submitted a 2020 or later Form W-4, claim Single or Married Filing Separately, and checked the box in step 2 of the IRS Form W-4 (to view the IRS Form W-4, including tables and worksheets).

Higher Single Tax Table

If the Amount of Taxable Income Is:	The Amount of Federal Income Tax Withholding Should Be:
Over $0 but not over $6,200	$0
Over $6,200 but not over $11,138	$0 plus 10.0% of excess over $6,200
Over $11,138 but not over $26,263	$493.75 plus 12.0% of excess over $11,138
Over $26,263 but not over $48,963	$2,308.75 plus 22.0% of excess over $26,263
Over $48,963 but not over $87,850	$7,302.75 plus 24.0% of excess over $48,963
Over $87,850 but not over $109,875	$16,635.75 plus 32.0% of excess over $87,850
Over $109,875 but not over $265,400	$23,683.75 plus 35.0% of excess over $109,875
Over $265,400	$78,117.50 plus 37.0% of excess over $265,400

Use the table below for employees who have submitted a 2020 or later Form W-4, claim Married Filing Jointly, and checked the box in step 2 of the IRS Form W-4 (to view the IRS Form W-4, including tables and worksheets).

Higher Married Filing Jointly Tax Table

If the Amount of Taxable Income Is:	The Amount of Federal Income Tax Withholding Should Be:
Over $0 but not over $12,400	$0
Over $12,400 but not over $22,275	$0 plus 10.0% of excess over $12,400
Over $22,275 but not over $52,525	$987.50 plus 12.0% of excess over $22,275
Over $52,525 but not over $97,925	$4,617.50 plus 22.0% of excess over $52,525
Over $97,925 but not over $175,700	$14,605.50 plus 24.0% of excess over $97,925
Over $175,700 but not over $219,750	$33,271.50 plus 32.0% of excess over $175,700
Over $219,750 but not over $323,425	$47,367.50 plus 35.0% of excess over $219,750
Over $323,425	$83,653.75 plus 37.0% of excess over $323,425

Use the table below for employees who have submitted a 2020 or later Form W-4, claim Head of Household, and checked the box in step 2 of the IRS Form W-4 (to view the IRS Form W-4, including tables and worksheets).

Higher Head of Household Tax Table

If the Amount of Taxable Income Is:	The Amount of Federal Income Tax Withholding Should Be:
Over $0 but not over $9,325	$0
Over $9,325 but not over $16,375	$0 plus 10.0% of excess over $9,325
Over $16,375 but not over $36,175	$705.00 plus 12.0% of excess over $16,375
Over $36,175 but not over $52,075	$3,081.00 plus 22.0% of excess over $36,175
Over $52,075 but not over $90,975	$6,579.00 plus 24.0% of excess over $52,075
Over $90,975 but not over $113,000	$15,915.00 plus 32.0% of excess over $90,975
Over $113,000 but not over $268,525	$22,963.00 plus 35.0% of excess over $113,000
Over $268,525	$77,396.75 plus 37.0% of excess over $268,525

Divide the annual Federal income tax withholding calculated in step 9 by the number of pay dates in the tax year to obtain the biweekly Tentative Federal Withholding amount.
If the employee has submitted a 2020 or later Form W-4 and has entered an Annual Dependent Tax Credit in step 3 of the Form W-4, divide the Annual Dependent Tax Credit by the appropriate number of pay dates in the tax year. Subtract the result from the biweekly Tentative Federal Withholding amount in step 10.
If the employee has elected to have additional tax withheld per pay period, then add the additional amount to the pay period tax calculated in the previous steps to determine the amount of tax to be withheld for this payroll period.

Resources

To view the updated tax formula, go to the HR and Payroll Clients page from the MyNFC drop-down menu on the National Finance Center (NFC) Home page. Select the Publications tab and select U.S. Income Tax Formulas from the Publications menu to launch the tax map. Select the desired State from the map provided for the formula.

For more information on the redesigned Form W-4, go to the IRS Web site.

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