How to Calculate Taxes Withheld on a Weekly Basis
Original post by Natalie Grace of Demand Media
The amount of taxes that are withheld from your paycheck depends on your payroll frequency and the type of tax. If you’re a salaried employee, you generally receive the same amount of income each payday. Therefore, your weekly tax amount stays constant, unless you have a pay or deduction change. If you’re an hourly wage earner and do not work the same number of hours each week, your tax amount fluctuates. Follow the administering agency’s rules to calculate weekly tax withholding.
Determine taxable wages by subtracting pretax deductions, such as traditional 401k contributions and section 125 health benefits from your gross pay before deducting the tax.
Calculate Social Security tax at 4.2 percent of weekly taxable wages, as of 2011. For example, you earn $475 weekly, your Social Security withholding is $19.95 ($475 x .042 = $19.95).
Figure Medicare tax at 1.45 percent of weekly taxable wages, as of 2011.
Compute federal income tax according to the IRS Circular E tax-withholding table that matches the filing status and allowances that you put on your W-4 form. Also include your weekly taxable wages and pay period. For example, if you earn $350 a week and claim married with one allowance, then your federal income tax withholding is $13.
Calculate applicable state and local income tax based on the state or local revenue agency’s requirements. For example, in Pennsylvania an employer withholds state income tax at 3.07 percent of weekly taxable wages, as of 2011. In New York City, an employer withholds city income tax based on the employee’s IT-2104 form, and the weekly tax-withholding tables in Publication NYS-50-T-NYC.
Tips & Warnings
- New Jersey, Alaska and Pennsylvania require employers to withhold state unemployment tax from employees’ wages according to the rate the state unemployment agency mandates.
- The annual wage base for Social Security tax is $106,800, as of 2011 -- your employer withholds up to that amount for the year.
- The annual wage limit for state unemployment tax withholding varies by state.
- IRS.gov: Circular E
- Tax-Tables: Withholding Tables
- Patriot Software; What Are Taxable Wages?; November 2010
- New York State Department of Taxation and Finance: Withholding Tax Forms 2010/2011 - Current Period
- Payroll-Taxes.com: Alaska State Tax Information
- Asher and Company: 2011 Payroll Tax Rates
About the Author
Natalie Grace has been writing since 2000, specializing in topics related to employment policies. Grace attended Miami Dade College and has more than 10 years of experience in accounting, human resources, and payroll-and-benefits administration. Her corporate experience includes working as a payroll specialist for a dental-health management firm and as a payroll-and-benefits administrator for a petroleum company.