How Your W-4 Sets Your Withholding
Your employer doesn't know your tax. It knows your pay and what's on your Form W-4, and it runs those through the IRS's withholding tables in Publication 15-T. The tables assume you take the standard deduction and that this paycheck is your household's only income. Each step of the W-4 corrects one of those assumptions:
- Step 1 sets your filing status, which picks the table.
- Step 2 is for two jobs or two working spouses. Checking the box halves the tax-free amount and every bracket.
- Step 3 subtracts credits for your children and other dependents, spread across the year's paychecks.
- Step 4(a) adds income with no withholding, so tax on it comes out of your pay.
- Step 4(b) subtracts deductions beyond the standard deduction.
- Step 4(c) adds a flat extra amount to every paycheck.
With one job and nothing else, a W-4 with only Step 1 filled in comes out close to even. A single person paid $2,500 every two weeks has $216.15 withheld per paycheck for 2026, $5,620 for the year, against a tax of $5,620.
What Changed on the 2026 W-4
- Step 3 uses the larger child tax credit: $2,200 per child under 17, up from $2,000. The credit for other dependents stays $500.
- The Step 4(b) worksheet covers the new deductions: qualified tips (up to $25,000), the overtime premium (up to $12,500, or $25,000 joint), interest on a loan for a new U.S.-assembled car (up to $10,000) and $6,000 for each person 65 or older. They don't reduce withholding unless you enter them.
- Claiming exempt is a checkbox below Step 4(c), instead of writing "Exempt" on the form.
Two Jobs: a Common Reason People Owe
Take a married couple who each earn $78,000, paid every two weeks, with only Step 1 filled in on both W-4s. Each employer withholds as if its paycheck were the couple's only income, so each starts from the full $32,200 joint standard deduction and the lowest brackets.
- Withheld for the year, both jobs: $10,000.
- Tax on their joint return: $16,660.
- Result: they owe $6,660 when they file.
Two fixes work. Checking the Step 2 box on both W-4s withholds $320.38 per paycheck from each, which comes out even, because the two jobs pay the same. Or one spouse can add $257 per paycheck in Step 4(c), which brings them within a few dollars of even.
Claim Your Children in Step 3
Leaving Step 3 blank is an easy way to over-withhold. A head of household paid $2,200 every two weeks with two children under 17 has $138.92 withheld per paycheck with Step 3 blank, and would get $4,696 back at tax time. Entering $4,400 in Step 3 cuts withholding to $0.00. The refund falls to $1,084, all of it refundable credits paid when they file, and each paycheck is $138.92 larger.
2026 Withholding Rates
On the 2026 STANDARD withholding tables (Step 2 box not checked), each rate starts at these annual amounts. Payroll compares them with your adjusted annual wage: your pay per check times the number of paychecks, plus Step 4(a), minus Step 4(b), minus $8,600 ($12,900 if married filing jointly).
| Rate | Single or married filing separately | Married filing jointly | Head of household |
|---|---|---|---|
| 0% | $0 | $0 | $0 |
| 10% | $7,500 | $19,300 | $15,550 |
| 12% | $19,900 | $44,100 | $33,250 |
| 22% | $57,900 | $120,100 | $83,000 |
| 24% | $113,200 | $230,700 | $121,250 |
| 32% | $209,275 | $422,850 | $217,300 |
| 35% | $263,725 | $531,750 | $271,750 |
| 37% | $648,100 | $788,000 | $656,150 |
These are the tax brackets moved up by a tax-free amount. Together with the $8,600 subtraction, it equals the $16,100 standard deduction ($32,200 joint, $24,150 head of household), which is why one job and a blank W-4 come out about even.
Getting Ready for 2027
The 2027 brackets and standard deduction are official: the IRS published them on November 5, 2026, and the calculator's 2027 option uses them. The child tax credit rises to $2,300 per child, so Step 3 goes up by $100 per child. The IRS publishes the 2027 withholding tables in December; until then the calculator builds them from the 2027 brackets the same way the IRS does. January is a good time to check: a raise, a new job, a child, a marriage or a big refund last year are all reasons for a new W-4. The 2027 tax figures page has the brackets and other amounts.
Related Calculators
The paycheck calculator shows your whole paycheck, including Social Security, Medicare and state tax. The tax refund calculator estimates your refund from a finished year's W-2. The bonus tax calculator covers bonuses, which are usually withheld at a flat 22% instead of through your W-4.
Frequently Asked Questions
What should I put on my W-4 so I don't owe taxes?
Fill in Step 1, then Step 3 if you have children under 17 ($2,200 each for 2026) or other dependents ($500 each). If you or your spouse have another job, check the Step 2 box on both W-4s or add extra withholding in Step 4(c). If you have income with no withholding, such as interest or freelance pay, list it in Step 4(a). The calculator above works out each entry from your pay and household.
How do I get more money in each paycheck?
Lower your withholding to match your actual tax. If you get a big refund every year, you are probably over-withheld: claim your children in Step 3, put deductions you will take (itemized deductions over the standard deduction, or the deductions for tips, overtime, car loan interest or being 65 or older) in Step 4(b), and remove any Step 4(c) extra you no longer need. Every dollar of refund you give up comes back spread across your paychecks.
Why do I owe taxes when tax was withheld from every paycheck?
Usually because each employer withholds as if its paycheck were your only income. With two jobs, or two working spouses, the second paycheck starts in the lowest bracket on its own W-4, but on your joint return it's taxed at your top rate. Other common causes: income with no withholding, a child turning 17 (the $2,200 credit becomes $500), or a W-4 that still claims a dependent you no longer have.
What does checking the box in Step 2 do?
It tells payroll to withhold as if your job paid half of a two-earner household's income: the tax-free amount and every bracket are cut in half. Check it on both W-4s when the two jobs pay about the same. With only one job, it over-withholds. For 2026, a married employee paid $3,000 every two weeks has $192.31 withheld with the box unchecked and $320.38 with it checked.
Can I claim exempt from withholding?
Only if you owed no federal income tax last year and expect to owe none this year. Since 2026 the W-4 has a checkbox for it below Step 4(c). An exempt W-4 lasts for one calendar year, so you have to give your employer a new one by mid-February to stay exempt, and Social Security and Medicare are still withheld.
How often can I change my W-4?
As often as you like. Give your employer a new form whenever your pay, household or deductions change. Employers have to start using it no later than the first payroll period ending on or after the 30th day after they get it, and most do it on the next paycheck.
Does my W-4 change Social Security and Medicare taxes?
No. The W-4 controls only federal income tax withholding. Social Security (6.2%) and Medicare (1.45%) are withheld at fixed rates whatever you enter. State withholding uses your state's own form in most states.
Will the new tips and overtime deductions lower my withholding automatically?
No. Employers withhold as if you take only the standard deduction. To have less withheld, add the deduction you expect to Step 4(b). The 2026 W-4 has a deductions worksheet with lines for qualified tips, overtime pay, car loan interest and being 65 or older. Otherwise you get the benefit as a larger refund when you file.