Federal 2026 Tax Rates and Calculations Basic Rates (Individual):
37%, 35%, 32%, 24%, 22%, 12%, and 10% based on annual taxable income To figure withholding from regular pay, employers use information filed by employees on Form W-4 and apply that to methods published in IRS Publication 15-T— draft calculations provided in Excel format can be used for system set-up until the publication is finalized For withholding on supplemental pay (commissions, bonuses and other irregular pay), employers can apply an optional flat rate of 22% (up to $1 million a year in supplemental pay); 37% is mandated on supplemental pay more than $1 million Maximum qualified overtime pay amounts that could be used to reduce taxes: $12,500 for those filing single; $25,000 for those filing jointly for calendar years 2025-2028. Maximum qualified tip wage amounts: $25,000 (regardless of the filing status of the taxpayer) for calendar years 2025-2028. OASDI: 6.2% of taxable wages for employers; 6.2% for employees (withheld from pay), up to $184,500 HI/Medicare: 1.45% of taxable wages for employers; 1.45% for employees (withheld from pay); additional 0.9% is withheld on employee wages in excess of $200,000 for a total rate of tax at 2.35% (employers continue to pay 1.45%) The tax rate for employers (there is no federal employee tax) is 6% of each employee’s income up to $7,000, but most employers can credit state unemployment taxes paid against that rate, up to 5.4%, effectively reducing the federal tax obligation to 0.6%. Note that California employers have a reduction in the credit and their federal tax obligation is triple the 0.6%, or 1.8%, due the beginning of 2026.
Social Tax Rates:
Unemployment Taxes:
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ISSUE 18 GLOBAL PAYROLL MAGAZINE
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