News & Resources


2018 Federal Percentage Method Income Tax Withholding Tables Released

BY: APA Staff | 02/08/18

On January 11, the IRS released Notice 1036, Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding. The IRS also issued news release IR-2018-05 and posted Frequently Asked Questions, which provide additional information on withholding changes for 2018 and 2019. The tables included in Notice 1036, along with the 2018 wage-bracket withholding tables, will appear in IRS Publication 15, (Circular E), Employer's Tax Guide, which will be published at a later date.

The withholding tables were released later than usual because Public Law 115-97, unofficially known as the Tax Cuts and Jobs Act (TCJA) was not enacted until December 22, 2017. The new withholding tables are designed to work with the Forms W-4 that employees have already filed with their employers to claim withholding allowances. This is intended to minimize the burden on employees and employers. Employees do not have to do anything at this time.

Implement by February 15

Notice 1036 says employers should implement the 2018 withholding tables as soon as possible, but not later than February 15, 2018. Until the 2018 withholding tables are implemented, employers should continue to use the 2017 withholding tables.

The withholding allowance amounts by payroll period have changed. For 2018 they are:

Payroll Period

One Withholding Allowance


$ 79.80













Daily or Miscellaneous
(each day of the payroll period)


When using the percentage method of withholding, the tax for the pay period may be rounded to the nearest dollar. If rounding is used, it must be used consistently.

Rates for withholding on supplemental wages for 2018

There is a two-tiered system for withholding income tax from supplemental wages at a flat rate:

  • Optional flat rate: 22% for supplemental wages up to and including $1 million (no other percentage allowed)
  • Mandatory flat rate: 37% for supplemental wages over $1 million.

2018 Rate for backup withholding

Payers of reportable payments generally must backup withhold 24% for federal income tax if the payee fails to provide a correct Taxpayer Identification Number (TIN).