The Percentage Method of Withholding is addressed in this memo which includes extractions from the 2011 Federal Income Tax Withholding Tables (found in the IRS Publication 15, Circular E - Employer's Tax Guide).
Please Note:
- The "Making Work Pay" credit expired on December 31, 2010.
- The annual personal exemption amount for 2011 is $3,700.00.
- Tax calculations and estimates of net pay can be readily determined by using the Central Payroll Bureau Net Pay Calculator
- Other important links are:
Federal Income Tax Table Information
2011 Maryland Withholding Tables
|
ALLOWANCE TABLE
|
|
Dollar Amount of Withholding Allowances
|
|
Number of
Withholding
Allowances
|
Biweekly
Pay
Period
|
Monthly
Pay
Period
|
|
0
|
$ 0
|
$ 0
|
|
1
|
142.31
|
308.33
|
|
2
|
284.62
|
616.66
|
|
3
|
426.92
|
924.99
|
|
4
|
569.24
|
1,233.32
|
|
5
|
711.55
|
1,541.65
|
|
6
|
853.86
|
1,849.98
|
|
7
|
996.17
|
2,158.31
|
|
8
|
1,138.48
|
2,466.64
|
|
9
|
1,280.79
|
2,774.97
|
|
10
|
1,423.10
|
3,083.30
|
|
Over 10 - Multiply amount of one withholding allowance ($142.31 for bi-weekly or $308.33 for monthly) by number of allowances claimed.
|
The annual personal exemption amount of $3,700 equals the biweekly amount of $142.31 (1 allowance) multiplied by 26, rounding to the nearest whole dollar, or the monthly amount of $308.33 (1 allowance) multiplied by 12, rounding to the nearest whole dollar.
NOTE: Use of these tables to compute estimated tax withholdings will result in amounts that differ slightly (by a few cents) from the precise amounts computed by the Statewide Payroll System
|
2011 Federal Income Tax Withholding Information
|
|
BIWEEKLY PAYROLL PERIOD
|
| Single Person - Including Head of Household |
| Taxable Income* |
|
Amount of Income Tax Withheld is: |
| Not over $81 |
|
0 |
|
| |
|
|
|
| Over - |
But not over - |
|
Of excess over - |
| $81 |
-$408 |
10% |
-$81 |
| $408 |
-$1,408 |
$32.70 plus 15% |
-$408 |
| $1,408 |
-$3,296 |
$182.70 plus 25% |
-$1,408 |
| $3,296 |
-$6,788 |
$654.70 plus 28% |
-$3,296 |
| $6,788 |
-$14,663 |
$1,632.46 plus 33% |
-$6,788 |
| $14,663 |
|
$4,231.21 plus 35% |
-$14,663 |
| |
|
|
|
| Married Person |
|
|
|
| Taxable Income* |
|
Amount of Income Tax Withheld is: |
| Not over $304 |
|
0 |
|
| |
|
|
|
| Over- |
But not over - |
|
Of excess over - |
| $304 |
-$958 |
10% |
-$304 |
| $958 |
-$2,958 |
$65.40 plus 15% |
-$958 |
| $2,958 |
-$5,663 |
$365.40 plus 25% |
-$2,958 |
| $5,663 |
-$8,469 |
$1,041.65 plus 28% |
-$5,663 |
| $8,469 |
-$14,887 |
$1,827.33 plus 33% |
-$8,469 |
| $14,887 |
|
$3,945.27 plus 35% |
-$14,887 |
* Taxable income is biweekly gross pay less tax sheltered and/or pre-tax deductions and the dollar amount of biweekly withholding allowances.
Note:
- Use of these tables to compute estimated tax withholdings will result in amounts that differ slightly (by a few cents) from the precise amounts computed by the Statewide Payroll System.
|
2011 Federal Income Tax Withholding Information
|
|
MONTHLY PAYROLL PERIOD
|
| Single Person - Including Head of Household |
| Taxable Income# |
|
Amount of Income Tax Withheld is: |
| Not over $175 |
|
0 |
|
| |
|
|
|
| Over - |
But not over - |
|
Of excess over - |
| $175 |
-$883 |
10% |
-$175 |
| $883 |
-$3,050 |
$70.80 plus 15% |
-$883 |
| $3,050 |
-$7,142 |
$395.85 plus 25% |
-$3,050 |
| $7,142 |
-$14,708 |
$1,418.85 plus 28% |
-$7,142 |
| $14,708 |
-$31,771 |
$3,537.33 plus 33% |
-$14,708 |
| $31,771 |
|
$9,168.12 plus 35% |
-$31,771 |
| |
|
|
|
| Married Person |
|
|
|
| Taxable Income# |
|
Amount of Income Tax Withheld is: |
| Not over $658 |
|
0 |
|
| |
|
|
|
| Over- |
But not over - |
|
Of excess over - |
| $658 |
-$2,075 |
10% |
-$658 |
| $2,075 |
-$6,408 |
$141.70 plus 15% |
-$2,075 |
| $6,408 |
-$12,271 |
$791.65 plus 25% |
-$6,408 |
| $12,271 |
-$18,350 |
$2,257.40 plus 28% |
-$12,271 |
| $18,350 |
-$32,254 |
$3,959.52 plus 33% |
-$18,350 |
| $32,254 |
|
$8,547.84 plus 35% |
-$32,254 |
# Taxable income is monthly gross pay less tax sheltered and/or pre-tax deductions and the dollar amount of monthly withholding allowances.
Note:
- Use of these tables to compute estimated tax withholdings will result in amounts that differ slightly (by a few cents) from the precise amounts computed by the Statewide Payroll System.
Examples of Withholding Calculations using the Percentage Method
Example 1
A married employee is paid $1,356.09 bi-weekly. This employee has in effect a Form W-4 claiming (0) withholding allowances. The employee also has a deferred comp deduction. Using the percentage method, figure the income tax to withhold as follows:
| Total wage payment |
|
$1,356.09 |
| No allowances claimed on W-4 |
$0.00 |
|
| Deferred compensation deduction |
$60.00 |
|
| Amount subject to withholding (subtract lines 2 & 3 from line 1) |
|
$1,296.09 |
Compute the withholding amount using the tax tables for Percentage Method of Withholding, BIWEEKLY Payroll Period, for a married person.
Since $1,296.09 falls within the range of $958 - $2,958, use the following calculation:
$65.40 plus 15% of the amount over $958.
The amount over $958 is $338.09 ($1,296.09 - $958.00)
15% of $338.09 is $50.71 ($354.09 X .15)
So the federal tax to be withheld would be $65.40 + $50.71 or $116.11.
Example 2
An unmarried employee is paid $4,000.00 monthly. This employee has in effect a Form W-4 claiming (2) withholding allowances. Using the percentage method, figure the income tax to withhold as follows:
| Total wage payment |
|
$4,000.00 |
| 2 allowances claimed on W-4 |
$616.66 |
(amount determined by allowance table) |
| Deferred compensation deduction |
$0.00 |
|
| Amount subject to withholding |
|
$3,383.34 |
Compute the withholding amount using the tax tables for Percentage Method of Withholding, MONTHLY Payroll Period, for an unmarried person.
Since $3,383.34 falls within the range of $3,050 - $7,142, use the following calculation:
$395.85 plus 25% of the amount over $3,050
The amount over $3,050 is $333.34 ($3,383.34 - $3,050.00)
25% of $333.34 is $83.34 ($333.34 X .25)
So the federal tax to be withheld would be $395.85 + $83.34 or $479.19. |
