Federal Withholding Tax

The amount of your Federal Withholding Tax deducted from your paycheck is based on the information on Form W-4 you provided to your employer.  The less exemption claimed the higher your federal withholding tax will be deducted.

For example, suppose that you are single and you make $1,000 taxable gross every two weeks (26,000 annually). You estimate that your tax liability for the year will be $2,000. Dividing this amount by 26 pay periods, you need $76.92 of tax withholding to exactly cover your tax liability.

The following table shows the federal tax withholding at different exemption levels.  If you claim 3 exemptions, you would own IRS approximately $140 at the end of the year. ($76.92-$71.44)*26 weeks

# of Exemption Claimed (W-4) Federal Tax Withheld
0 $123.37
1 $106.06
2 $88.75
3 $71.44

For more information on Federal withholding tax, take a look at IRS P15T Publication.  IRS Publication 15-T (New Wage Witholding Tables) has breakdown of amount of withholding tax.