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The changed tax rate was made retroactive from the beginning of 2003 and the Congress realizes that many employees would have had higher amounts withheld as per the rates under the previous tax law. However, those employees who have extra amount withheld as per the old tax law, will get a refund of the amount through the normal tax filing system and not through the payor. This means that employers were advised not to correct the amounts that were withheld earlier.
In addition, employees could take steps to adjust their withholding so that the tax paid is nearer to the tax owed. However, employees could claim more allowances than they were entitled to based on their current exemptions, deductions and credits.
Ever since 2003, changes are being made to the federal withholding tax table. In 2008, a new federal withholding tax table will be used and this was notified by the IRS through Publication 15 of the Employer’s Tax Guide. The table gives information not just on federal withholding but also FICA tax, Medicare tax and FUTA taxes. For 2008, the federal withholding tax table is as follows:
Single persons |
Married Persons |
Earnings |
Addon |
Rate |
10,300.00 |
765.00 |
15.00% |
33,960.00 |
4,314.00 |
25.00% |
79,725.00 |
15,755.25 |
28.00% |
166,500.00 |
40,052.25 |
33.00% |
359,650.00 |
103,791.75 |
35.00% |
|
Earnings |
Addon |
Rate |
23,550.00 |
1,555.00 |
15.00% |
72,150.00 |
8,845.00 |
25.00% |
137,850.00 |
25,270.00 |
28.00% |
207,700.00 |
44,828.00 |
33.00% |
365,100.00 |
96,770.00 |
35.00% |
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Deductions per dependant: $3,500
Supplemental income rate: 25 percent
Additional Federal Payroll Taxes |
Tax |
Maximum Earnings |
Rate |
FICA |
102,000.00 |
6.20% |
Medicare |
Unlimited |
1.45% |
FUTA |
7,000.00 |
0.80% |
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