The IRS has released Publication 15, Circular E, Employer's Tax Guide, containing the federal income tax withholding formula and tables as well as other employer guidance for tax year 2019.

2019 Form W-4 notice

Under the Tax Cuts and Jobs Act (TCJA), and effective January 1, 2018 through December 31, 2025, the personal exemption deduction is suspended; however, the IRS will not be modifying the Form W-4 to reflect the law change until 2020. (TCJA Section 11041; IRS Notice 2018-92 and Notice 2018-51.)

Until April 30, 2019, employees who have a reduction in the claimed number of withholding allowances solely due to changes under the TCJA are not required to give their employer a new Form W-4 until May 10, 2019 (10 days after April 30, 2019). However, if employees no longer reasonably expect to be entitled to the claimed number of withholding allowances because of a change in personal circumstances not solely related to changes under the TCJA (for example, an employee's child no longer qualifies as the employee's dependent because of the child's change in residence), they must furnish their employer a new Form W-4 within 10 days after the change. In addition, if employees who claimed married filing status on Form W-4 divorce, they must furnish their employer a new Form W-4 within 10 days after the change. Employees who have a reduction in the claimed number of withholding allowances after April 30, 2019, for any reason are required to give their employer a new Form W-4 within 10 days of the change in status resulting in the reduction in withholding allowances.

Social Security and Medicare tax

As previously reported, the 2019 Social Security wage base is increased from $128,400 to $132,900. (See EY Payroll Newsflash, Vol. 19, #164, 10-11-2018.)

The Social Security and Medicare tax rates for both the employer and the employee remain unchanged at 6.2% and 1.45%, respectively.

Also unchanged is the Additional Medicare tax. Employers are required to withhold Additional Medicare tax of 0.9% on Medicare wages in excess of $200,000. There is no employer contribution.

Backup withholding rate

Effective with payments made on and after January 1, 2018, the backup withholding rate is 24%. Backup withholding is required from certain taxable nonwage payments if payees fail to furnish their taxpayer identification numbers to the payer.

Nonresident alien employees

Add these amounts to employee's wages for calculating income tax withholding. (Nonresident alien students and business apprentices from India aren't subject to this procedure.)

Personal allowances

The following is a reprint of the personal allowance values to be used in connection with the annual percentage method of withholding.

Table 7 — Annual payroll period — 2019

(For wages paid January 1, 2019, through December 31, 2019)

(a) Single person (including head of household)

(b) Married person

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EY Payroll News Flash