How to calculate the amount of tax that comes out of a payroll check

Employers are often required by law to withhold federal income tax, Medicare tax, and Social Security tax from their employees from payroll checks. In addition, all states require you to deduct your taxes, with the exception of Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming. As an employer, you must calculate each tax based on the withholding criteria.

Check the withholding tables in Circular E of the Internal Revenue Service for the appropriate fiscal year and determine the federal income tax. The IRS sends employers an updated copy of Circular E annually. It can also be found through the IRS website. You will also need the working conditions of retention, such as marital status and compensation. You can get this information on the W-4 form. The amount of income tax depends on the employee’s income, marital status, subsidies and withholding tables for federal taxes. Suppose he earns $ 1,200 biweekly and claims to have married a subsidiary. Circular 2010 says that you must withhold $ 50 from each of your biweekly payroll checks.

Calculate Social Security and Medicare retention. You can find the respective percentages in Circular E and on the Social Security Administration website. You must withhold Social Security taxes at 6.2 percent of gross income and Medicare tax at 1.45 percent as of 2010. It should be noted that the Social Security salary cap is US $ 106,800 for the year. You should not deduct more than the Social Security taxes to employees who have met this amount for the year. Starts the retention of a backup when the new year has begun. This is an example of Social Security: US $ 1,200 x 0,062 = US $ 74,40, the fortnightly withholding. Medicare Example: US $ 1,200 x 0,0145 = US $ 17.40, for biweekly withholding.

Calculate the state income tax. Use the state employee withholding certificate and state withholding tax tables. Rates vary by state, so you must use the tax tables that apply to the state where the employee works. For example, according to Georgia’s tax tables, you should retain $ 18.06 per week for an employee who earns $ 500 a week and is single, with two withholdings.


If the employee claims to be “exempt” from the withholding of W-4 ​​or state taxes, you should not withhold any federal and state income taxes, respectively. In addition, if your tax form includes a fixed amount of tax that must be withheld from your paycheck, you must include it in the withholding amount.