Withholding tables, other key Payroll info for 2022 – UPDATED

UPDATE: IRS has issued the final version of Publication 15-T for use in 2022. The publication contains information employers need to determine employees’ federal income tax withholding, including tables and worksheets.

Now that IRS has released a draft version of Publication 15-T, you can make more progress on your payroll system updates for 2022.

On Dec. 3, 2021, IRS released a draft version of the publication which contains seven federal income tax withholding methods.

They are:

1. Percentage Method Tables for Automated Payroll Systems and Withholding on Periodic Payments of Pensions and Annuities
2. Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2020 or Later
3. Wage Bracket Method Tables for Manual Payroll Systems With Forms W-4 From 2019 or Earlier
4. Percentage Method Tables for Manual Payroll Systems With Forms W-4 From 2020 or Later
5. Percentage Method Tables for Manual Payroll Systems With Forms W-4 From 2019 or Earlier
6. Alternative Methods for Figuring Withholding, and
7. Tables for Withholding on Distributions of Indian Gaming Profits to Tribal Members.

Form W-4P withholding

In addition to withholding tables, Publication 15-T includes the computational bridge employers may need if they expect employees to fill out the 2021 Form W-4P during some or all of 2022.

By way of reminder, IRS says that although the overhauled W-4P will be available in 2022, it won’t be required until Jan. 1, 2023.

Employers that aren’t ready to switch to the revised form will need to make four adjustments to their payroll systems if they opt to use the computational bridge. See Page 7 of Publication 15-T for the details.

The advantages of using the computational bridge are that you’ll simplify data storage and eliminate some steps in Worksheet 1B.

Note: An employee who chooses not to have income tax withheld would write “No Withholding” on the 2022 W-4P. On the 2021 version of the form, employees simply check a box.