Federal tax withholding is the amount your employer withholds from your paycheck to remit to the federal government as your income tax obligation. The amount of federal tax withheld depends on your income, filing status, and the number of allowances you claimed on your W-4 form.Your W-4 form is a form you fill out when you start a new job to inform your employer how much federal tax to withhold from your paycheck stub. The form allows you to specify your filing status, the number of dependents you have, and other personal information the employer will use to determine your federal tax withholding.
Federal tax rates are progressive, meaning that the more you earn, the higher the percentage of your paycheck stub you will pay in taxes. For instance, in 2021, you won't owe any federal income tax if you earn less than $9,950 as a single filer or $19,900 as a married filing jointly. If you earn between $9,951 and $40,525 as a single filer or between $19,901 and $81,050 as a married filing jointly, you'll owe 12% of your income in federal income tax.
