Withholding
Tax your employer removes from each paycheck and remits on your behalf as a prepayment toward your annual bill.
Payroll glossary · Updated 2026-08-29
Withholding is not your tax. It is an instalment plan. Your actual liability is settled on your return, and the difference between what was withheld and what you owe is your refund or balance due.
Federal income tax withholding is computed from your Form W-4 using the Publication 15-T percentage method: your pay for the period is annualized, adjusted for Step 4 entries and a standard-deduction offset, run through the schedule for your filing status, reduced by Step 3 credits and divided back down.
This annualization explains most of what people find odd about withholding — why a paycheck containing overtime or a bonus is withheld at a higher rate, and why it evens out across the year.
Where you will see it
Withholding lines sit in the middle of a stub, between earnings and deductions, and there is one for each authority that taxes you: federal, state, sometimes a city or county, and sometimes a school district.
What it is often confused with
The word covers two quite different things. Wage withholding is the routine payroll process described here. Backup withholding is a flat rate applied to certain payments when a taxpayer identification number is missing or incorrect, and it usually signals a problem worth fixing rather than a routine deduction.
2026 reference figures
The numbers below are the 2026 amounts that most often come up alongside this term. They change every year, so check the tax year before relying on them.
| 2026 figure | Amount |
|---|---|
| Social Security rate and wage base | 6.2% up to $184,500 |
| Medicare rate | 1.45%, no cap |
| Additional Medicare Tax | 0.9% above $200,000 of wages |
| Standard deduction, single | $16,100 |
| Standard deduction, married filing jointly | $32,200 |
| 401(k) elective deferral limit | $24,500 |
| HSA limit, self-only | $4,400 |
| Health FSA limit | $3,400 |
| Supplemental wage withholding rate | 22% up to $1,000,000 |
| W-4 Step 3 credit per qualifying child | $2,200 |
Common questions
Is withholding the same as tax?
No. Withholding is a prepayment; your tax is calculated on your return.
Can I change my withholding?
Yes, by filing a new Form W-4 with your employer at any time.