TAXES 16-01, Federal Income Tax Withholding

Published: January 5, 2016
Effective: Pay Period 25, 2015

Summary

Effective January 1, 2016, the Federal income tax withholding tax formula changed. The Single or Head of Household and Married withholding tables changed, and the exemption allowance increased from $4,000 to $4,050.

Beginning with salary payments for Pay Period 25, 2015, Federal income tax were automatically be withheld in accordance with the new formula. No action on the part of the employee or the personnel office is necessary.

Tax Formula

Acceptable Exemption Form:

W-4

Basis for Withholding:

Federal Exemptions

Acceptable Exemption Data:

S, M/Number of Allowances

TSP Deferred:

Yes

Special Coding:

None

Additional Information:

Single or Head of Household will both elect Single (S) marital status on line 3 of Form W-4.

Withholding Formula (Effective Pay Period 25, 2015)

  1. Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
  2. Subtract the nontaxable biweekly Federal Health Benefits Plan payment(s) (includes dental and vision insurance program, and flexible spending account - health care and dependent care deductions) from the amount computed in step 1.
  3. Add the taxable biweekly fringe benefits (taxable life insurance, etc.) to the amount computed in step 2 to obtain the adjusted gross biweekly wages.
  4. Multiply the adjusted gross biweekly wages times 26 to obtain the gross annual wages.
  5. Determine the personal exemption by applying the following guideline and subtract this amount from the gross wages to compute the taxable income.

    Exemption Allowance = $4,050 x Number of Exemptions

  6. Apply the taxable income computed in step 5 to the following table to determine the Federal income tax withholding.
    Tax Withholding Table Single or Head of Household

    If the Amount of Taxable Income Is:

    The Amount of Federal Income Tax Withholding Should be:

    Not More than $2,250

    $0

    Over $2,250 but not over $11,525

    $0 plus 10.0% over $2,250

    Over $11,525 but not over $39,900

    $927.50 plus 15.0% over $11,525

    Over $39,900 but not over $93,400

    $5,183.75 plus 25.0% over $39,900

    Over $93,400 but not over $192,400

    $18,558.75 plus 28.0% over $93,400

    Over $192,400 but not over $415,600

    $46,278.75 plus 33.0% over $192,400

    Over $415,600 but not over $417,300

    $119,934.75 plus 35.0% over $415,600

    Over $417,300 and over

    $120,529.75 plus 39.6% over $417,300
    Tax Withholding Table Married

    If the Amount of Taxable Income Is:

    The Amount of Federal Income Tax Withholding Should be:

    Not More than $8,550

    $0

    Over $8,550 but not over $27,100

    $0 plus 10.0% over $8,550

    Over $27,100 but not over $83,850

    $1,855.00 plus 15.0% over $27,100

    Over $83,850 but not over $160,450

    $10,367.50 plus 25.0% over $83,850

    Over $160,450 but not over $240,000

    $29,517.50 plus 28.0% over $160,450

    Over $240,000 but not over $421,900

    $51,791.50 plus 33.0% over $240,000

    Over $421,900 but not over $475,500

    $111,818.50 plus 35.0% over $421,900

    Over $475,500 and over

    $130,578.50 plus 39.6% over $475,500
  7. Divide the annual Federal income tax withholding by 26 to obtain the biweekly Federal income tax withholding.

Inquiries

For questions about NFC processing, authorized Servicing Personnel Office representatives should contact the NFC Contact Center at 1-855-NFC-4GOV (1-855-632-4468) or via the Internet using the Requester Console.

Additional Resources

W-4, Employee's Withholding Allowance Certificate

Employees who intend to claim total Federal tax exemption for CY 2016 must submit a new W-4 prior to February 21, 2016. Effective Pay Period 04, 2016, employees who claimed total exemption for CY 2015 and who have not filed a new W-4 for CY 2016 will have Federal taxes withheld as single taxpayers with zero withholding allowance. A W-4 filed for the prior year does not extend tax exemption into CY 2016. A new W-4 must be filed for CY 2016.

To view the updated tax formula, go to the HR/Payroll Client page and click the Publications tab in the center ribbon. Select U.S Income Tax Formulas from the Publication menu to launch the tax map. Click the Federal Income Tax Information under Additional Formulas and Agreements for the formula.