Federal Income Tax Table Information

Included here are extractions from the 2008 Federal Income Tax Withholding Tables (found in the IRS Publication 15, Circular E - Employer's Tax Guide).

For purposes of this memo, we address the Percentage Method of withholding.    

Please Note:

1. The annual personal exemption amount for 2008 has increased to $3,500.00.

2. Tax calculations and estimates of net pay can be readily determined by using the Net Pay Calculator.

3. Other important links located on Central Payroll Bureau home page are:

• 2008 Federal Withholding Tax Tables
• 2008 Maryland Withholding Tax Tables

The following Federal income tax percentage-method withholding tables apply to wages paid in 2008

You can arrive at the annual personal exemption amount of $3,500 by multiplying the Bi-Weekly amount of $134.62 (1 exemption) times 26 and rounding to nearest whole dollar or multiplying the Monthly amount of $291.67 (1 exemption) times 12 and rounding to 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

* Taxable income is bi-weekly gross pay less tax sheltered and/or pre-tax deductions and the dollar amount of bi-weekly withholding allowances.

Note:

• Because of 2008 inflation adjustments the above Tax-bracket thresholds have increased for each filing status
• 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.

# Taxable income is monthly gross pay less tax sheltered and/or pre-tax deductions and the dollar amount of monthly withholding allowances.

Note:

• Because of 2008 inflation adjustments the above Tax-bracket thresholds have increased for each filing status
• 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:

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 $906 - $2,775, use the following calculation:

$59.80 plus 15% of the amount over $906. 

The amount over $906 is $390.09 ($1,296.09 - $906.00)

15% of $390.09 is $58.51 ($390.09 X .15)

So the federal tax to be withheld would be $59.80 + $58.51 or $118.31.

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:

Compute the withholding amount using the tax tables for Percentage Method of Withholding, MONTHLY Payroll Period, for an unmarried person.

Since $3,416.66 falls within the range of $2,830 - $6,644, use the following calculation:

$359.20 plus 25% of the amount over $2,830

The amount over $2,830 is $586.66 ($3,416.66 - $2,830.00)

25% of $586.66 is $146.67 ($586.66 X .25)

So the federal tax to be withheld would be $359.20 + $146.67 or $506.17.