2026 IRS Withholding Tables & Circular E (Employer’s Tax Guide)

2026 IRS Withholding Tables & Circular E – As payroll professionals and employers prepare for the 2026 tax year, understanding the latest IRS withholding requirements is essential for accurate payroll processing and compliance. The IRS has released Publication 15 (Circular E), Employer’s Tax Guide for 2026, along with Publication 15-T, Federal Income Tax Withholding Methods, which contains the actual 2026 federal income tax withholding tables. These documents incorporate significant changes from the One Big Beautiful Bill Act (P.L. 119-21), including permanent extensions of certain tax rates and new deductions affecting withholding calculations.

This guide breaks down the key elements of the 2026 IRS withholding tables and Circular E, based on official IRS publications available at IRS.gov.

What is Circular E? Publication 15 Explained

Publication 15 (Circular E), Employer’s Tax Guide is the primary resource for employers on federal employment tax responsibilities. It covers:

  • Withholding, depositing, reporting, and paying social security, Medicare, and federal income taxes.
  • Rules for fringe benefits, supplemental wages, and special employee categories (e.g., farmworkers, election workers).
  • General instructions on Form W-4 processing and employment tax obligations.

For 2026, the withholding tables and detailed calculation methods have been moved to the separate Publication 15-T. Employers must reference both documents together for complete guidance.

Key updates in Publication 15 (2026):

  • Social security tax rate remains 6.2% for both employer and employee, with a wage base of $184,500 (adjusted for inflation).
  • Medicare tax rate remains 1.45% (plus Additional Medicare Tax for high earners).
  • Permanent extension of individual income tax rates from the Tax Cuts and Jobs Act (TCJA).
  • New provisions for employer contributions to “Trump accounts” starting July 4, 2026 (up to $2,500 annually, indexed for inflation after 2027).
  • Election workers paid $2,500 or more are subject to social security and Medicare taxes.

Download the full Publication 15 (2026) PDF from IRS.gov.

2026 IRS Withholding Tables: Now in Publication 15-T

The 2026 federal income tax withholding tables are detailed in Publication 15-T, Federal Income Tax Withholding Methods. This separate publication includes:

  • Percentage Method Tables for automated payroll systems.
  • Wage Bracket Method Tables for manual calculations.
  • Instructions for withholding on periodic pension/annuity payments.
  • Alternative methods and tables for special cases (e.g., Indian gaming profits distributions).
  • Adjustments for nonresident aliens.

The tables have been updated to reflect:

  • Inflation adjustments.
  • Changes from P.L. 119-21, including new above-the-line deductions for qualified tips (up to $25,000) and qualified overtime compensation (up to $12,500 single/$25,000 joint, for tax years 2025–2028).

These deductions are subject to social security and Medicare taxes but reduce federal income tax withholding when properly claimed on Form W-4.

Download Publication 15-T (2026) from IRS.gov.

Key Withholding Methods for 2026

  1. Percentage Method (Ideal for automated systems):
    • Adjust wages based on Form W-4 inputs (filing status, credits, deductions).
    • Apply progressive rate schedules from the tables.
  2. Wage Bracket Method (Simpler for manual payroll):
    • Look up withholding directly based on pay period, wages, and filing status.

Employers must use the employee’s most recent Form W-4 (2026 version recommended for new deductions). The updated Form W-4 includes a deductions worksheet for qualified tips and overtime, allowing employees to reduce withholding upfront.

Impact of the One Big Beautiful Bill Act (OBBBA)

P.L. 119-21 introduces major changes affecting 2026 withholding:

  • Permanent TCJA rate extension: Maintains the 10%, 12%, 22%, 24%, 32%, 35%, and 37% brackets.
  • New deductions: Employees can claim deductions for tips and overtime in Step 4(b) of Form W-4, potentially lowering withholding.
  • Transition relief for 2025 meant no table updates that year, but 2026 fully implements these via updated tables and forms.

Employers should encourage employees (especially in tipped or hourly roles) to update their Form W-4 using the IRS Tax Withholding Estimator to avoid under- or over-withholding.

Employer Compliance Tips for 2026

  • Update payroll systems: Import the new tables from Publication 15-T immediately.
  • Train staff: Review nonresident alien adjustments and supplemental wage rules (22% flat rate remains).
  • Handle special cases: Use worksheets for pensions/annuities and nonresident aliens.
  • Stay current: Check IRS.gov for any late updates, as drafts were released earlier in 2025.

Failure to use the correct 2026 tables can lead to penalties, incorrect W-2s, and employee tax surprises.

Where to Access Official Resources?

For personalized advice, consult a tax professional. These updates ensure accurate withholding aligned with the latest tax law changes as of December 2025. Stay compliant and help your employees maximize take-home pay in 2026!