This method works for any amount of wages. Section 4 of the publication contains the percentage method tables for manual payroll systems with Forms W-4 from 2020 or later. If an employer can’t use these tables because taxable wages exceed the amount from the last bracket of the table (based on marital status and pay period), or the employee claimed more than 10 allowances, the employer should use the percentage method tables in Section 5. The IRS notes that these tables cover only up to approximately $100,000 in annual wages and up to 10 allowances. Section 3 of the publication contains the wage bracket method tables for manual payroll systems with Forms W-4 from 2019 or earlier. If an employer can’t use these tables because taxable wages exceed the amount from the last bracket of the table (based on filing status and pay period), the employer should use the percentage method tables in Section 4. The IRS notes that these tables cover only up to approximately $100,000 in annual wages. Section 2 of the publication contains the wage bracket method tables for manual payroll systems (payroll calculated entirely on paper) with Forms W-4 from 2020 or later.

Tax rates in the tables range from 10% to 37%. This method works for any number of withholding allowances claimed if the Form W-4 is from 2019 or earlier. This method also works for any amount of wages. The IRS says that this method works with both Forms W-4 from 2019 or earlier, and Forms W-4 from 2020 or later. Section 1 of the publication contains the percentage method withholding tables for automated payroll systems. Withholding calculations are quite different than in previous years due to changes in the federal income tax law and the redesign of Form W-4. The publication includes 2020 percentage method and wage bracket withholding tables, withholding adjustments for nonresident alien computations, alternative methods for figuring withholding, and the tables for withholding on distributions of Indian gaming profits to tribal members. IRS Publication 15-T (Federal Income Tax Withholding Methods) has been finalized.

Irs 2020 tax withholding tables