The new withholding rates are a result of the Making Work Pay provision of the American Recovery and Reinvestment Act of 2009. According to the IRS, this provision may provide a tax credit of up to $400 for employees who claim single and up to $800 for employees who claim married.
Nonresident alien employees who earned income subject to Federal taxes could see an increase in their Federal withholdings. The amount added to a nonresident alien’s wages to calculate their Federal withholding has increased from $102.00 to $276.00 (biweekly).
Note: High-income individuals, employees with multiple jobs or married couples with combined incomes should review their withholding allowances to ensure sufficient withholding of Federal taxes.
The new withholding rates appear in IRS Publication 15-T at www.irs.gov.