Notice 1036

Department of the Treasury

Internal Revenue Service

Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding Future Developments

For the latest i nformation about development s related to Notice 1036, such as legislation enacted after it was published, go to

IRS.gov/Notice1036

.

2018 Withholding Tables

This notice includes the 2018 Percentage Method Tables for Income Tax Withholding. Employers should implement the 2018 withholding tables as soon as possible, but not later than February 15, 2018. Continue to use the 2017 withholding tables until you implement the 2018 withholding tables.

Percentage Method Tables for Income Tax Withholding

Attached are early release copies of the Percentage Method Tables for Income Tax Withholding that will appear in Pub. 15, Employer's Tax Guide (For use in 2018). Pub. 15 will be posted on IRS.gov in January 2018. The wage amounts shown in the Percentage Method Tables for Income Tax Withholding are net wages after the deduction for total withholding allowances. The withholding allowance amounts by payroll period have changed. For 2018, they are:

Payroll Period One Withholding Allowance

W e e k l y $ 7 9 . 8 0 B i w e e k l y 1 5 9 . 6 0 S e m i m o n t h l y 1 7 2 . 9 0 M o n t h l y 3 4 5 . 8 0 Q u a r t e r l y 1 , 0 3 7 . 5 0 S e m i a n n u a l l y 2 , 0 7 5 . 0 0 A n n u a l l y 4 , 1 5 0 . 0 0 Daily or Miscellaneous (each day of the payroll period) 16.00

When employers use the Percentage Method Tables for Income Tax Withholding, the tax for the pay period may be rounded to the nearest dollar. If rounding is used, it must be used consistently. Withheld tax amounts should be rounded to the nearest dollar by dropping amounts under 50 cents and increasing amounts from 50 to 99 cents to the next higher dollar. For example, $2.30 becomes $2 and $2.50 becomes $3.

Withholding Adjustment for Nonresident Aliens

For 2018, apply the procedure discussed below to figure the amount of income tax to withhold from the wages of nonresident alien employees performing services within the United States.

Note.

Nonresident alien students from India and business apprentices from India aren't subject to this procedure.

Instructions.

To figure how much income tax to withhold from the wages paid to a nonresident alien employee performing services in the United States, use the following steps.

Step 1.

Add to the wages paid to the nonresident alien employee for the payroll period the amount shown in the chart below for the applicable payroll period.

Amount to Add to Nonresident Alien Employee's Wages for Calculating Income Tax Withholding Only

P a y r o l l P e r i o d A d d A d d i t i o n a l

W e e k l y $ 1 5 1 . 0 0 B i w e e k l y 3 0 1 . 9 0 S e m i m o n t h l y 3 2 7 . 1 0 M o n t h l y 6 5 4 . 2 0 Q u a r t e r l y 1 , 9 6 2 . 5 0 S e m i a n n u a l l y 3 , 9 2 5 . 0 0 A n n u a l l y 7 , 8 5 0 . 0 0 Daily or Miscellaneous (each day of the payroll period) 30.20

Step 2.

Use the amount figured in

Step 1

and the number of withholding allowances claimed (generally limited to one allowance) to figure income tax withholding. Determine the value of withholding allowances by multiplying the number of withholding allowances claimed by the appropriate amount in the table shown earlier. Reduce the amount figured in

Step 1

by the value of withholding allowances and use that reduced amount to determine the wages subject to income tax withholding. Figure the income tax withholding using the Perc entage Method Tabl es for Income Tax Withholding provided on pages 3 and 4. Alternatively, you can figure the i ncome tax withholding using the Wage Bracket Method Tables for Income Tax Withholding included in Pub. 15 (For use in 2018).

IRS.gov