Tax Withholding
Income tax your employer deducts from each paycheck and sends to the government on your behalf.
What does tax withholding mean?
Withholding is a prepayment of your annual tax, set by your W-4. Too little and you owe at tax time; too much and you get a refund — essentially an interest-free loan to the government.
Put it to use
Related terms
Tax Withholding — frequently asked
How do I adjust my tax withholding?
Submit a new Form W-4 to your employer. Claiming fewer allowances or adding an extra dollar amount increases withholding; the opposite lowers it. Adjust after a raise, marriage, a new child, or if you owed or over-refunded last year.
Why do I owe taxes if money was withheld all year?
Withholding is only an estimate. If it did not cover your actual liability — because of side income, a bonus, two earners, or too-low W-4 settings — you owe the difference at filing. Raising withholding prevents a repeat.