How PayRecordly Calculates Payroll Taxes

Federal income tax withholding

The federal calculation follows the 2026 automated percentage method in IRS Publication 15-T. PayRecordly annualizes wages by the selected pay frequency, applies the relevant filing-status schedule and Form W-4 adjustments, then converts the result back to the pay period.

The workflow supports the Step 2 multiple-jobs checkbox, Step 3 credits, Step 4(a) other income, Step 4(b) deductions, and Step 4(c) extra withholding. It does not prepare or submit Form W-4 for an employee.

Social Security and Medicare

For 2026, the employee Social Security rate is 6.2 percent on covered wages up to the $184,500 wage base. The employee Medicare rate is 1.45 percent without a wage base, with 0.9 percent Additional Medicare Tax withholding after the employer pays an employee more than $200,000 in the calendar year.

Year-to-date covered wages are used when applying annual thresholds. Deduction categories reduce only the tax bases allowed by the configured rule; a deduction does not automatically reduce every tax.

State, local, and manual calculations

Automatic state calculation is available only for a released, date-effective rule in the local data set. A jurisdiction without a reviewed automatic rule requires an employer-verified amount or an explicit determination that the item does not apply.

Local wage taxes and special employee payroll contributions can depend on the exact work location and other facts. PayRecordly does not guess an unresolved locality. The generator creates a statement; it does not deposit, report, or file the taxes it displays.

• Rule data is selected by the pay date
• Tax lines identify automatic and verified-manual modes
• A date outside the released rule period is blocked