What factors determine how much tax is withheld from each paycheck?

• A. Filing status, number of allowances, income level, and state tax rules (plus any extra withholding).
• B. Age and dependents only.
• C. Job title and company size.
• D. Geographic location only.

Answer: (A)

Payroll withholding from each paycheck is driven by the information you provide on your withholding form and the tax tables your employer uses. The main factors are your filing status (how you’ll file your tax return), the number of allowances or the amount of dependents you claim, your overall income level for the year, and the state or local tax rules that apply where you work. You can also specify extra withholding to cover additional taxes you expect to owe. These elements determine how much federal and state income tax is taken out each pay period, adjusted for how often you’re paid. Age, job title, or company size don’t set the withholding amounts, and geographic location alone doesn’t capture the full picture since state rules plus any extra withholding matter too.