If you look at the IRS table, https://www.irs.gov/pub/irs-pdf/p15.pdf#page=42 , you can see the percentage method and wage bracket methods are not equivalent. For example, if I am a single person on a weekly payroll period earning $44 a week, according to table 1 on page 45, I should get taxed 0%. But according to wage bracket table on page 47, taxes don't start until $55.

That means if I make $55, according to the percentage method, I will be taxed $5.50, and according to the wage bracket table I will be taxed $0. What is going on here?

  • Aganju has the full answer, but note that both of your numbers in the last paragraph are incorrect: at $55 weekly income, according to the percentage method you will have withheld (not be taxed) $1.10 (not $5.50), while according to the wage bracket table you will have withheld $1.00 (not $0). – user4556274 Sep 30 '17 at 12:27

The line in the first table you are referring to says: 0 $ plus 10% on excess over 44$. If you calculate this, it results in less than one dollar until you reach 55$, and therefore is rounded down (the IRS assumes that withholdings are only calculated in full dollars). Generally, they round all withholdings down to the next lower integer amount.

Don’t forget that withholdings are only estimates for taxes to be paid, not final taxes. The final exact tax is calculated after completion of the year, and there is only one correct result.

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