The Internal Revenue Service (IRS) has issued new tables for the percentage method of federal income tax withholding for 2026, as published in IRS Publication 15-T. These tables include an Employer’s Worksheet to be used when computing federal tax withholding for wages paid on or after January 1, 2026.

To use the IRS worksheet and withholding tables, wages must be annualized. Annualized income is calculated by multiplying the federal taxable wages for the current bi-weekly pay period by 26 pay periods for the year 2026.

Form W-4 Guidance

For employees with a 2019 or earlier Form W-4:

• One withholding allowance remains $4,300.

For employees with a 2020 or later Form W-4:

• Step 2 of Form W-4 determines which set of withholding tables is used.
  • The first set of tables applies to employees who:
    • Have a 2019 or earlier Form W-4, or
    • Have a 2020 or later Form W-4 without the box in Step 2(c) checked.
  • The second set of tables applies to employees who:
    • Have a 2020 or later Form W-4 with the box in Step 2(c) checked.

Exempt Status Requirements

IRS regulations continue to require employees claiming exempt status from federal income tax withholding (for income earned in the United States) to submit a new Form W-4 annually. Employees may claim exempt status only if both of the following conditions are met:

1. The employee had no federal income tax liability in the prior year, and
2. The employee expects no federal income tax liability in the current year.

SHARP Employees

SHARP employees are encouraged to use Employee Self Service beginning January 1, 2026, to submit their 2026 Form W-4. The Form W-4 is available on the IRS website at www.irs.gov.

The Office of Accounts and Reports, Payroll Systems Team, will implement the necessary changes to federal withholding tax calculations for SHARP agencies. Regent institutions are responsible for implementing the updated withholding tables and rates within their own payroll systems.

Regent Institutions – Additional Guidance

Regent institutions should note that the annual amount added to Nonresident Alien (NRA) employee wages for calculating federal income tax withholding for 2026 is:

• $11,800 for NRA employees who have not submitted a 2020 or later Form W-4, and
• $16,100 for NRA employees who have submitted a 2020 or later Form W-4 or were first paid wages in 2020 or later.

Regents should also review IRS Publication 1494 for any updates to amounts used in calculating tax levies related to garnishments. The federal withholding rate on supplemental wages remains 22% for 2026.

IRS regulations require nonresident alien employees who claim an exempt status from federal income tax withholding up to their treaty limit (for income earned in the United States) to submit a new Form 8233 annually. Employees who claimed a nonresident alien exempt status in a prior calendar year must submit a new Form 8233 for 2026 to continue claiming this status.

As a reminder, Regent institutions are responsible for verifying eligibility, ensuring compliance with IRS requirements, and monitoring maximum presence for their nonresident alien employees.

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