Overview of 2026 Federal Form W-4
The Internal Revenue Service (IRS) has released the 2026 Federal Form W-4, Employee’s Withholding Certificate. This guide by Strongpay outlines key updates and provides clear, step-by-step guidance to help you complete the form with confidence.
Noteworthy Changes
The child dependent credit amount for 2026 is $2,200 per child
New “Exemption from withholding” checkbox
Major updates to the deductions worksheet in Step 4(b), which are based on the new tax provisions from the One Big Beautiful Bill Act (OBBBA).
General Information
Please Note: We expect the IRS to make additional revisions and updates before the end of year.
Form W-4 instructs your employer how much federal income tax to withhold from your paycheck. The federal income tax withheld is reported on Form W-2 and on your personal tax return. It is important to have sufficient income tax withholding from your paycheck to avoid owing taxes on your personal tax return. If too much tax is withheld from your paycheck throughout the year, the IRS may issue a refund when you file your personal tax return. It is important for you to check the income tax withholding on your paycheck throughout the year and update Form W-4 for any major life events that may affect your personal tax obligation.
Please note your personal tax obligation is determined by multiple factors outside of your paycheck (e.g. filing status, dependents, credits, additional income, etc.), so your employer is not in a position to advise you how to complete Form W-4. However, you can consult with your accountant or personal tax return preparer who can review your financial situation and advise appropriately, or you can use the IRS withholding estimator to estimate the tax due based on your tax situation and advises how to complete Form W-4 to ensure sufficient income tax withholding.
Overview of Form W-4 Fields
The basic structure of the form remains similar to previous years, with five key steps.
Step 1: Personal Information
Your full name
Social Security number
Home address
Filing status (Single, Married filing jointly/Qualifying surviving spouse, or Head of household). If all the rest of the options are the same, selecting Single filing status will result in highest income tax withholding.
Step 2: Multiple Jobs or Working Spouse (complete only if applicable)
Complete this step only if:
You have more than one job, OR
You are married and you and your spouse both work.
In order to complete this section you can use one of the following three options:
Use the IRS withholding estimator, or
Use the worksheet on page 3 (more detailed), or
Check the box if you have only two total jobs. Check the box on the W-4 for your other job as well. In addition, complete Steps 3-4 on the W-4 for your highest paying job and leave them blank on the W-4 for your lowest paying job to ensure sufficient income tax withholding.
Step 3: Claim Dependents and Other credits (Optional)
If you are married and both spouses claim dependents on their W-4, you will not have enough income tax withholding and will owe taxes on your personal tax return. Instead claim dependents only on one of the spouses W-4, typically the one for the highest paying job.
Form W-4 no longer allows for number of allowances. Instead, it requires the monetary amount of the dependent credit to be entered in payroll. To calculate the amount of the credit enter the number of qualifying children (the child must be under age 17 as of December 31, must be your dependent who generally lives with you for more than half the year, and must have the required social security number) and other dependents (an older child or a qualifying relative, for eligibility requirements review Pub. 501, Dependents, Standard Deduction, and Filing Information) and multiply by the amounts shown on the form.
Important: the higher the amount of the claimed credit, the less income taxes will be withheld from your paycheck, which may result in taxes due when you file your personal tax return. If you do not claim dependent credit in this step and leave it blank, you will still have the option to claim the credit on your personal tax return at the end of the year.
Step 4: Other Adjustments (Optional)
You may use Step 4 if you would like to further adjust your withholding.
4(a) Other income: Use this step to add income from sources like interest, dividends, etc. This income will not be reported on Form W2 but it will be added to the taxable wages when federal income tax is calculated, so additional tax will be withheld from your paycheck to cover the tax due for this additional income.
4(b) Deductions: Use the new expanded deductions worksheet on page 4 of the Form W-4 to calculate your deductions. The worksheet was updated to include the OBBBA provisions for:
Tip Deduction - If total income is less than $150,000 ($300,000 if married filing jointly), enter an estimate of your qualified tip income (up to $25,000).
Overtime pay deduction - If your total income is less than $150,000 ($300,000 if married filing jointly), enter an estimate of your qualified overtime compensation (up to $12,500 ($25,000 if married filing jointly) of the “and-a-half” portion of time-and-a-half compensation)
Additional Deductions for Car Loan Interest - If your total income is less than $100,000 ($200,000 if married filing jointly), enter an estimate of your qualified new car loan interest (up to $10,000 in interest).
Special Deduction for Individuals Age 65 or older
Itemized deductions - Enter an estimate of your 2026 itemized deductions (from Form 1040 Schedule A)
Standard deduction
Cash gifts to charities
Important: the deductions listed above will be based on your estimate, so it is advisable to estimate more conservatively to avoid taxes due on your personal tax return at the end of the year. Consult with your tax return preparer to review your financial situation and advise how to complete Form W-4 to ensure proper federal income tax withholding. If in doubt, it is advisable to leave this section blank and claim these deductions on your personal tax return at the end of the year instead.
4(c) Extra withholding: Add an extra dollar amount to be withheld from each paycheck.
Claiming Tax Exempt Status
To claim tax exempt status, 2025 and prior Forms W-4 required to write EXEMPT under box 4c). Starting with the 2026 Form W-4, employees who are exempt from income tax (both conditions below must be met) can check the box in the Exempt from withholding section.
had no federal income tax liability in 2025 and
expect to have no federal income tax liability in 2026.
Please note, checking the Exempt box will result in zero income tax withholding, so if the box was checked in error, you may owe taxes on your personal tax return.
Step 5: Sign and Date the Form
The form must be signed and dated before you provide it to your employer.
Additional Resources and Tips for Employees Completing 2026 Form W4
1. Gather income and deduction details and understand the requirements
Review IRS OBBA Guidance and consult with your personal tax return preparer
Estimate your annual tip earnings if you qualify under the OBBBA rules. Here is the preliminary list of tipped occupations eligible for the exemption released by the Treasury Department.
Estimate your annual overtime earnings if you qualify. Only nonexempt employees can claim exemption only for the “and-a-half” portion of time-and-a-half compensation.
Gather documentation for auto loan interest payments on eligible vehicles (vehicle assembled in U.S. and purchased between 20252028)
Important: If you cannot estimate these deductions, it is advisable to be on the conservative side and not include them when you complete the Federal Form W-4. You will still have an option to claim these deductions when you file your personal tax return at the end of the year.
2. Consult with personal tax return preparer or accountant for additional guidance. Income tax obligations include many factors like additional income, spousal income, dependents, multiple jobs, etc., so employers and payroll providers are not in a position to advise employees how to complete Form W-4.
If consulting with a personal tax return preparer or accountant is not an option, you can use the IRS Withholding Estimator (see point 3. below).
3. Use IRS Withholding Estimator
The IRS withholding estimator is a valuable tool for employees to ensure accurate withholding based on your full financial profile, especially with added deductions. At the beginning of 2026 the IRS will update the online estimator. It is crucial for you to confirm the IRS online withholding estimator is updated before you use it to determine your 2026 federal income tax withholding setup.
4. Claiming Allowances No Longer an Option
While employees were able to claim filing status and certain number of allowances in the past (e.g. Married Filing status with 2 allowances), starting with the 2020 Form W-4 that is no longer allowed because the tax tables and tax calculations have changed. You need to complete Steps 3 – 4 instead to claim any applicable credits.
5. Additional Income Tax Withholding
If you would like additional tax withholding per paycheck, enter the amount in Step 4(c).
6. Reduce Income Tax Withholding
If you would like less tax taken out, review Steps 2–4 to ensure they match your situation. Proceed with caution because overestimating credits can result in tax due on your tax return.
7. Keep Your Form Up to Date
Review your financial situation periodically throughout the year and submit a revised Form W4 if your income or deductions change significantly—like starting a new job, buying a car eligible for interest deduction, change in dependents, change in marital status, etc. to ensure accurate withholding and avoid surprises at the end of the year.
8. Review your paystub a few times throughout the year to ensure the federal and state income tax withholding is correct.