​What is withholding tax, and do I check or change it? 

When you get your paycheck every other week, you’ll notice the amount you earned during the pay period isn’t the same amount you take home. That’s because your employer withholds some money from each paycheck in the form of withholding taxes, which help pay your income tax bill throughout the year.It’s important to understand how income tax withholding works, how it affects your tax bill (or refund) at the end of the year, and how to check or change your tax withholding to make sure you’re having the right amount taken out for your situation.A withholding tax is the money your employer deducts from your paychecks each month to pay income taxes on your behalf. The amount of taxes your employer will withhold depends on your earnings and the information you provide on the IRS Form W-4.The federal government operates on a pay-as-you-earn tax system. In other words, you’re required to pay taxes on your income as you earn it. Tax withholding ensures the government will have regular tax revenue throughout the year. And for your part, it helps you avoid a hefty tax bill when you file your income tax return the following spring.Withholding taxes are required for most income, including regular pay, commissions, pensions, bonuses, reimbursements, gambling winnings, and other income. If you aren’t subject to tax withholding — if you’re self-employed, for example — you’re still required to pay taxes by certain due dates throughout the year in the form of estimated tax payments.Your employer calculates your tax withholding based on your annual earnings and the information you provide on your W-4 form. On the W-4, you provide information such as: Your filing status The number of dependents Other income, including interest, dividends, and retirement income that doesn’t have taxes automatically withheld Deductions you’re eligible for other than the standard deduction Extra withholding taxes you want withheld each pay period Once you complete your W-4, your employer uses withholding tables provided by the IRS, along with other adjustments on your W-4, to help calculate the correct withholding amount. The amount you’ll pay depends on the income tax rate that applies to your earnings.If you live in a state that has income taxes, you’ll also likely have money withheld for your state income taxes. Because each state has its own tax code, the system for calculating tax withholdings and the way you can check or change your withholding will vary from state to state.Read more: Federal income tax brackets and rates for 2024-2025 The simplest way to check your tax withholding is by using the IRS Tax Withholding Estimator. You’ll provide information about yourself, your income and withholding, your income adjustments, and your tax credits and deductions.Based on the information you provide, the IRS calculator will determine your anticipated tax obligation. It will also project a tax refund or underpayment amount based on your expected tax