Monday, January 11, 2010

IRS Withholding Tables for 2010

It's a new year, which means it's time for new federal tax withholding tables!

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: 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, 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!

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— Posted by Michael @ 8:20 AM


So I have always found this confusing. Should I calculate this based on Gross or Gross minus deductions. The way I read it the Std deduction for married filing jointly in 2010 will be 11400. Child deductions 3600. There is a vast difference in taxes paid.



Withholding calcs go something like this:

[Gross income] minus [any pretax deductions] minus [value for all allowances claimed]

Then take that final value and plug it into the withholding charts to see what amount will be withheld.

The allowances you claim on your W-4 have a dollar value, depending on your payment period. More explanation of all this can be found in IRS' Publication 15.

I do all my tax calcs in Excel (withholding calcs included), but lots of people recommend the IRS' own withholding calculator.


Michael -

Need your help. Visit me again

C'mon ... you reference Dave Ramsey (I just finished Total Money Makeover). Was hoping to follow the Baby Steps after the home purchse (haven't used credit cards in month, started my monthly budget, selling things with Gazelle intensity to get my $1,000reserve and start paying down debt).

But would Dave post and run or would he try to help somebody see they error in their financial thought?


Even the guy who is in charge of the IRS has a tax man because the tax code is to difficult for him to understand.
That makes me feel good. How about a flat tax?



I like the idea, but flat tax won't happen. It'd kill jobs (no need for tax accountants and armies of IRS employees) and relinquish some amount of government control. (Complexity breeds dependence.)

Neither of those ideas are palatable to Congress, I can assure you.

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