Federal Income Tax Withholding: Employer Payroll Taxes (2026 IRS Guide)

This guide covers “Federal Income Tax Withholding” within employer payroll taxes. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 15 (2026), (Circular E), Employer’s Tax Guide, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Federal Income Tax Withholding

Redesigned Form W‐4.

The IRS redesigned Form W‐4 for 2020 and subsequent years. Before 2020, the value of a withholding allowance was tied to the amount of the personal exemption. Due to changes in the law, taxpayers can no longer claim personal exemptions or dependency exemptions; therefore, Form W‐4 no longer asks an employee to report the number of withholding allowances that they are claiming. The revised Form W‐4 is divided into five steps. Step 1 and Step 5 apply to all employees. In Step 1, employees enter personal information like their name and filing status. In Step 5, employees sign the form. Employees who complete only Step 1 and Step 5 will have their withholding figured based on their filing status’s standard deduction and tax rates with no other adjustments. If applicable, in Step 2, employees increase their withholding to account for higher tax rates due to income from other jobs in their household. Under Step 2, employees either enter an additional amount to withhold per payroll period in Step 4(c) or check the box in Step 2(c) for higher withholding rate tables to apply to their wages. In Step 3, employees decrease their withholding by reporting the annual amount of any credits they will claim on their income tax return. In Step 4, employees may increase or decrease their withholding based on the annual amount of other income or deductions they will report on their income tax return and they may also request any additional federal income tax they want withheld each pay period.

An employee who submitted Form W‐4 in any year before 2020 isn’t required to submit a new form merely because of the redesign. Employers will continue to figure withholding based on the information from the employee’s most recently submitted Form W‐4. The withholding tables in Pub. 15‐T allow employers to figure withholding based on a Form W‐4 for 2019 or earlier, as well as the redesigned Form W‐4. While you may ask your employee who was first paid wages before 2020 who hasn’t yet submitted a redesigned Form W‐4 to submit a new Form W‐4 using the redesigned version of the form, you should explain to them that they’re not required to do this and if they don’t submit a new Form W‐4, withholding will continue based on a valid Form W‐4 previously submitted. All newly hired employees must use the redesigned form. Similarly, any other employees who wish to adjust their withholding must use the redesigned form.

Pub. 15‐T provides an optional computational bridge to treat 2019 and earlier Forms W‐4 as if they were 2020 or later Forms W‐4 for purposes of figuring federal income tax withholding. This computational bridge allows you to use computational procedures and data fields for a 2020 and later Form W-4 to arrive at the equivalent withholding for an employee that would have applied using the computational procedures and data fields on a 2019 or earlier Form W-4. See How To Treat 2019 and Earlier Forms W‐4 as if They Were 2020 or Later Forms W‐4 under Introduction in Pub. 15-T.

More information.

For more information about the redesigned Form W‐4 and regulations that provide guidance for employers concerning income tax withholding from employees’ wages, see Treasury Decision 9924, 2020‐44 I.R.B. 943, available at IRS.gov/irb/2020‐44_IRB#TD‐9924. For information about Form W‐4, go to IRS.gov/FormW4. Employer instructions on how to figure employee withholding are provided in Pub. 15‐T, available at IRS.gov/Pub15T.

Tip:

Farm operators and crew leaders must withhold federal income tax from the wages of farmworkers if the wages are subject to social security and Medicare taxes.

Using Form W-4 to figure withholding.

To know how much federal income tax to withhold from employees’ wages, you should have a Form W-4 on file for each employee. Encourage your employees to file an updated Form W-4 for 2026, especially if they owed taxes or received a large refund when filing their 2025 tax return.

Ask all new employees to give you a signed Form W-4 when they start work. Make the form effective with the first wage payment. If a new employee doesn’t give you a completed Form W-4 in 2026 (including an employee who previously worked for you and was rehired in 2026, and who fails to furnish a Form W-4), treat the new employee as if they had checked the box for Single or Married filing separately in Step 1(c) and made no entries in Step 2, Step 3, or Step 4 of the 2026 Form W-4. An employee who was paid wages before 2020 and who failed to furnish a Form W-4 should continue to be treated as single and claiming zero allowances on a 2019 Form W-4. If you use the optional computational bridge, described earlier under Redesigned Form W-4, you may treat this employee as if they had checked the box for Single or Married filing separately in Step 1(c), and made no entries in Step 2 and Step 3, an entry of $8,600 in Step 4(a), and an entry of zero in Step 4(b) of the 2026 Form W-4.

Electronic system to receive Form W-4.

You may establish a system to electronically receive Forms W-4 from your employees. See Regulations section 31.3402(f)(5)-1(c) and Pub. 15-T for more information.

Effective date of Form W-4.

A Form W-4 for 2025 or earlier years remains in effect for 2026 unless the employee gives you a 2026 Form W-4. When you receive a new Form W-4 from an employee, don’t adjust withholding for pay periods before the effective date of the new form. If an employee gives you a Form W-4 that replaces an existing Form W-4, begin withholding no later than the start of the first payroll period ending on or after the 30th day from the date when you received the replacement Form W-4. For exceptions, see Exemption from federal income tax withholding, IRS review of requested Forms W-4, and Invalid Forms W-4, later in this section.

Caution:

A Form W-4 that makes a change for the next calendar year won’t take effect in the current calendar year.

Successor employer.

If you’re a successor employer (see Successor employer, later in this section), secure new Forms W-4 from the transferred employees unless the “Alternative Procedure” in section 5 of Revenue Procedure 2004-53 applies. See Revenue Procedure 2004-53, 2004-34 I.R.B. 320, available at IRS.gov/irb/2004-34_IRB#RP-2004-53.

IRS Tax Withholding Estimator for employees.

You may advise your employees to use the IRS Tax Withholding Estimator available at IRS.gov/W4App for help in determining how to complete their Forms W-4. An employee that makes a mid-year change to their withholding after using the IRS Tax Withholding Estimator may be underwithheld or overwithheld once their Form W-4 is applied to the next full calendar year. Therefore, you should remind employees that made a mid-year change to revisit the IRS Tax Withholding Estimator in early January and submit a new Form W-4 for the year.

Completing Form W-4.

The amount of any federal income tax withholding must be based on filing status, income (including income from other jobs), deductions, and credits. Your employees may not base their withholding amounts on a fixed dollar amount or percentage. However, an employee may specify a dollar amount to be withheld each pay period in addition to the amount of withholding based on filing status and other information reported on Form W-4.

Employees that are married filing jointly and have spouses that also currently work, or employees that hold more than one job at the same time, should account for their higher tax rate by completing Step 2 of their 2026 Form W-4. Employees also have the option to report on their 2026 Form W-4 other income they will receive that isn’t subject to withholding and other deductions they will claim in order to increase the accuracy of their federal income tax withholding.

See Pub. 505 for more information about completing Form W-4. Along with Form W-4, you may wish to order Pub. 505 for use by your employees.

Don’t accept any withholding or estimated tax payments from your employees in addition to withholding based on their Form W-4. If they require additional withholding, they should submit a new Form W-4 and, if necessary, pay estimated tax by filing Form 1040-ES or by making an electronic payment of estimated taxes. Employees who receive tips may provide funds to their employer for withholding on tips; see Collecting taxes on tips in section 6.

Exemption from federal income tax withholding.

Generally, an employee may claim exemption from federal income tax withholding because they had no income tax liability last year and expect none this year. See the Form W-4 instructions for more information. However, the wages are still subject to social security and Medicare taxes. See also Invalid Forms W-4, later in this section.

A Form W-4 claiming exemption from withholding is effective when it is given to the employer and only for that calendar year. To continue to be exempt from withholding, an employee must give you a new Form W-4 by February 15. If the employee doesn’t give you a new Form W-4 by February 15, begin withholding as if they had checked the box for Single or Married filing separately in Step 1(c) and made no entries in Step 2, Step 3, or Step 4 of the 2026 Form W-4. If the employee provides a new Form W-4 claiming exemption from withholding on February 16 or later, you may apply it to future wages but don’t refund any taxes withheld while the exempt status wasn’t in place.

Withholding federal income taxes on the wages of nonresident alien employees.

In general, you must withhold federal income taxes on the wages of nonresident alien employees. However, see Pub. 515 for exceptions to this general rule. See section 5 for more guidance on H-2A visa workers.

Withholding adjustment for nonresident alien employees.

Nonresident aliens may not claim the standard deduction on their tax returns; therefore, employers must add an amount to the wages of nonresident alien employees performing services within the United States in order to figure the amount of federal income tax to withhold from their wages. The amount is added to their wages solely for calculating federal income tax withholding. The amount isn’t included in any box on the employee’s Form W-2 and doesn’t increase the income tax liability of the employee. The amount also doesn’t increase the social security tax or Medicare tax liability of the employer or the employee, or the FUTA tax liability of the employer. See Withholding Adjustment for Nonresident Alien Employees under Introduction in Pub. 15-T for the amount to add to their wages for the payroll period.

Supplemental wage payment.

The adjustment for determining the amount of income tax withholding for nonresident alien employees doesn’t apply to a supplemental wage payment (see section 7) if the 37% mandatory flat rate withholding applies or if the 22% optional flat rate withholding is being used to calculate income tax withholding on the supplemental wage payment.

Nonresident alien employee’s Form W-4.

When completing Forms W-4, nonresident aliens are required to:

• Not claim exemption from income tax withholding (even if they meet both of the conditions to claim exemption from withholding listed in the Form W-4 instructions);

• Request withholding as if they’re single, regardless of their actual filing status;

• Not claim the child tax credit or credit for other dependents in Step 3 of Form W-4 (if the nonresident alien 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 Pub. 519, U.S. Tax Guide for Aliens), the child tax credit or credit for other dependents); and

• Write “Nonresident Alien” or “NRA” in the space below Step 4(c) of Form W-4.

If you maintain an electronic Form W-4 system, you should provide a field for nonresident aliens to enter nonresident alien status instead of writing “Nonresident Alien” or “NRA” in the space below Step 4(c) of Form W-4. You should instruct nonresident aliens to see Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens, before completing Form W-4.

Form 8233.

If a nonresident alien employee claims a tax treaty exemption from withholding, the employee must submit Form 8233 with respect to the income exempt under the treaty, instead of Form W-4. For more information, see the Instructions for Form 8233 and Pay for Personal Services Performed under Withholding on Specific Income in Pub. 515.

IRS review of requested Forms W-4.

When requested by the IRS, you must make original Forms W-4 available for inspection by an IRS employee. You may also be directed to send certain Forms W-4 to the IRS. You may receive a notice from the IRS requiring you to submit a copy of Form W-4 for one or more of your named employees. Send the requested copy or copies of Form W-4 to the IRS at the address provided and in the manner directed by the notice. The IRS may also require you to submit copies of Form W-4 to the IRS as directed by a revenue procedure or notice published in the Internal Revenue Bulletin.

After submitting a copy of a requested Form W-4 to the IRS, continue to withhold federal income tax based on that Form W-4 if it is valid (see Invalid Forms W-4, later in this section). However, if the IRS later notifies you in writing that the employee isn’t entitled to claim exemption from withholding or a claimed amount of deductions or credits, withhold federal income tax based on the effective date, employee’s permitted filing status, and withholding instructions specified in the IRS notice (commonly referred to as a “lock-in letter”).

Initial lock-in letter.

The IRS uses information reported on Form W-2 to identify employees with withholding compliance problems. In some cases, if a serious underwithholding problem is found to exist for a particular employee, the IRS may issue a lock-in letter to the employer specifying the employee’s permitted filing status and providing withholding instructions for the specific employee. You’ll also receive a copy for the employee that identifies the permitted filing status and provides a description of the withholding instructions you’re required to follow and the process by which the employee can provide additional information to the IRS for purposes of determining the appropriate withholding and/or modifying the specified filing status. You must furnish the employee copy to the employee within 10 business days of receipt if the employee is employed by you as of the date of the notice. You may follow any reasonable business practice to furnish the employee copy to the employee. Begin withholding based on the notice on the date specified in the notice.

Implementation of lock-in letter.

When you receive the notice specifying the permitted filing status and providing withholding instructions, you may not withhold immediately on the basis of the notice. You must begin withholding tax on the basis of the notice for any wages paid after the date specified in the notice. The delay between your receipt of the notice and the date to begin the withholding on the basis of the notice permits the employee time to contact the IRS.

Seasonal employees and employees not currently performing services.

If you receive a notice for an employee who isn’t currently performing services for you, you’re still required to furnish the employee copy to the employee and withhold based on the notice if any of the following apply.

• You’re paying wages for the employee’s prior services and the wages are subject to income tax withholding on or after the date specified in the notice.

• You reasonably expect the employee to resume services within 12 months of the date of the notice.

• The employee is on a leave of absence that doesn’t exceed 12 months or the employee has a right to reemployment after the leave of absence.

Termination and rehire of employees.

If you must furnish and withhold based on the notice and the employment relationship is terminated after the date of the notice, you must continue to withhold based on the notice if you continue to pay any wages subject to income tax withholding. You must also withhold based on the notice or modification notice (explained next) if the employee resumes the employment relationship with you within 12 months after the termination of the employment relationship.

Modification notice.

After issuing the notice specifying the permitted filing status and providing withholding instructions, the IRS may issue a subsequent notice (modification notice) that modifies the original notice. The modification notice may change the permitted filing status and withholding instructions. You must withhold federal income tax based on the effective date specified in the modification notice.

New Form W-4 after IRS notice.

After the IRS issues a notice or modification notice, if the employee provides you with a new Form W-4 claiming complete exemption from withholding or a completed Form W-4 that results in less withholding than would result under the IRS notice or modification notice, disregard the new Form W-4. You must withhold based on the notice or modification notice unless the IRS notifies you to withhold based on the new Form W-4. If the employee wants to put a new Form W-4 into effect that results in less withholding than required, the employee must contact the IRS.

If, after you receive an IRS notice or modification notice, your employee gives you a new completed Form W-4 that results in more withholding than would result under the notice or modification notice, you must withhold tax based on the new Form W-4. Otherwise, disregard any subsequent Forms W-4 provided by the employee and withhold based on the IRS notice or modification notice.

Caution:

If, in a year before 2020, you received a lock-in letter for an employee, then for 2026 you should continue to follow the instructions in the lock-in letter. You will use the withholding methods described in Pub. 15-T for an employee with a Form W-4 from 2019 or earlier, or you may use the optional computational bridge to treat 2019 and earlier Forms W-4 as if they were 2020 or later Forms W-4 for purposes of figuring federal income tax withholding. See How To Treat 2019 and Earlier Forms W-4 as if They Were 2020 or Later Forms W-4 under Introduction in Pub. 15-T. You should continue following the instructions in the pre-2020 lock-in letter until you receive a letter releasing your employee from the lock-in procedures, you receive a modification notice, or your employee gives you a new Form W-4 that results in more withholding than would result under the notice.

For additional information about employer withholding compliance, see IRS.gov/WHC.

Substitute Forms W-4.

You’re encouraged to have your employees use the official version of Form W-4. You may use a substitute version of Form W-4 to meet your business needs. However, your substitute Form W-4 must contain language that is identical to the official Form W-4 and your form must meet all current IRS rules for substitute forms. At the time you provide your substitute form to the employee, you must provide them with all tables, instructions, and worksheets from the current Form W-4. For more information, see Pub. 15-T.

You can’t accept substitute Forms W-4 developed by employees. An employee who submits an employee-developed substitute Form W-4 after October 10, 2007, will be treated as failing to furnish a Form W-4. However, continue to honor any valid employee-developed Forms W-4 you accepted before October 11, 2007.

Invalid Forms W-4.

Any unauthorized change or addition to Form W-4 makes it invalid. This includes taking out any language by which the employee certifies the form is correct. A Form W-4 is also invalid if, by the date an employee gives it to you, they clearly indicate it is false. An employee who submits a false Form W-4 may be subject to a $500 penalty. You may treat a Form W-4 as invalid if the employee wrote “exempt” below Step 4(c) and checked the box in Step 2(c) or entered numbers for Steps 3 and 4.

When you get an invalid Form W-4, don’t use it to figure federal income tax withholding. Tell the employee it is invalid and ask for another one. If the employee doesn’t give you a valid one, and you have an earlier Form W-4 for this employee that is valid, withhold as you did before. If you don’t have an earlier Form W-4 that is valid, withhold tax as if the employee had checked the box for Single or Married filing separately in Step 1(c) and made no entries in Step 2, Step 3, or Step 4 of the 2026 Form W-4. However, an employee who was paid wages in 2019 who never submitted a valid Form W-4 and submits an invalid Form W-4 in 2026 should continue to be treated as single and claiming zero allowances on a 2019 Form W-4. If you use the optional computational bridge, described earlier under Redesigned Form W-4, you may treat this employee as if they had checked the box for Single or Married filing separately in Step 1(c), and made no entries in Step 2 and Step 3, an entry of $8,600 in Step 4(a), and an entry of zero in Step 4(b) of the 2026 Form W-4.

Amounts exempt from levy on wages, salary, and other income.

If you receive a Notice of Levy on Wages, Salary, and Other Income (a notice in the Form 668 series), you must withhold amounts as described in the instructions for these forms. Pub. 1494 has tables to figure the amount exempt from levy. If a levy issued in a prior year is still in effect and the taxpayer submits a new Statement of Exemptions and Filing Status, use the current year Pub. 1494 to figure the exempt amount.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 15 (2026), (Circular E), Employer’s Tax Guide: Withholding From Employees’ Wages — Federal Income Tax Withholding — Internal Revenue Service; 2026 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.