I know, I know. You readers' hearts are all aflutter. The excitement is palpable. You're giddy with Christmas-like anticipation.
Well, calm down, Beavis. The new withholding tables are here:
IRS.gov: 2010 Employers' Tax Withholding Tables
This year, however, we have something unusual with our withholding tables, and that something is intrigue.
You see, someone made changes to them thar tables. According to biggovernment.com, Congress has gone and fiddled with the tables, all quiet-like, in order to create more money for the gubmint to play with ... without having to directly raise taxes. (Times being what they are, and Congress' spending inclinations being so unrestrained, perhaps FedGov has simply borrowed a cash-flow strategy from California?)
Actually, I don't know whether that's the case or not. And I'm not about to devote the time to plugging numbers into 37 different versions of our tax tables to see what the outcomes are.
What I do know is this: When I use Excel to compare my household's withholding across three different sets of tax tables (2009 original, 2009 after stimulus, and 2010), I find nothing nefarious.
We know that the tax tables were revised in February of 2009 to account for the "Making Work Pay" tax credits passed by Congress. In my family's case, that credit was $800. What I'd expect to see, therefore, is a difference in roughly that amount from what would've been withheld using 2009's original tax tables versus what was withheld in 2009's revised tables, and versus what will be withheld using 2010's tax tables.
And that's pretty much what I found.
The revised 2009 tax tables (post tax credit) had my employer withholding $600.30 less than it would have done using 2009's original tables (pre tax credit). And the 2010 tables will have me withholding $603.60 less than would've been done with 2009's original tables. In both cases, the government's adjustments to the withholding tables effectively give me most of the $800 "Making Work Pay" credit during the current year, just as we were told would be the case.
There is more math work to do here, though, if someone is so inclined. I don't have an answer as to why, for 2010, there will be nine tax-withholding brackets rather than the seven we saw in 2009. But what I do see (via the spreadsheet below) is that some odd things happen when semimonthly income reaches the $5k-$6k level. ("Odd" as in: It's odd when compared to what the revised 2009 withholding tables provided this same income bracket last year.)
You can find more info regarding the "Making Work Pay" tax credit here. (It's worth noting that the $800 credit phases out for married couples who earn $150k or more per year.)
If you'd like to play around with the spreadsheet I used (tables are for the "Married / Semimonthly" pay basis), it's available here. If nothing else, it's a good example of how to calculate taxes via tax tables using Excel!