Payroll taxes
Form W-4 (2026): how employees fill it out, exempt status, deadlines and employer rules
Form W-4, Employee's Withholding Certificate, tells an employer how much federal income tax to withhold. The 5 steps, the 2026 Step 4(b) deductions for tips, overtime and car loan interest, exempt status renewal by February 16, 2027, the 30-day and 10-day rules, invalid forms, lock-in letters and 4-year record keeping.
Prepared by Aldro Accounting · Updated · Sources checked
The quick answer
Form W-4, Employee's Withholding Certificate, is completed by every new employee and given to the employer, not the IRS, so the employer can figure federal income tax withholding. If an employee doesn't give a properly completed W-4, the IRS says to withhold as if they are single or married filing separately with no other entries. A W-4 claiming exemption lasts one year: for 2026 it must be renewed by February 16, 2027.
What Form W-4 is for
When you hire an employee, you must have the employee complete Form W-4. The employer uses it to figure how much federal income tax to withhold from each paycheck. Withholding allowances are gone: employees who gave a valid W-4 before 2020 don't need a new one just because of the redesign, and the employer keeps using their most recent form.
Form W-4 is meant for employees who aren't subject to self-employment tax and doesn't compute self-employment tax. Nonresident alien employees should see Notice 1392 and the Form 8233 instructions before completing it.
Forms can be downloaded from the IRS or ordered at 800-TAX-FORM (800-829-3676). An employer may build a substitute form only if its language is identical to the official form, and can't accept a substitute an employee made.
The five steps
Only Step 1 (name and filing status) and Step 5 (signature) are required for every employee. Steps 2 to 4 are completed only if they apply. The form isn't valid unless the employee signs it under penalties of perjury.
Two jobs or a working spouse
Complete Steps 3 to 4(b) on the W-4 for only one job and leave them blank on the others. Withholding is most accurate when they're on the highest-paying job's form.
Checking box 2(c) cuts the standard deduction and tax brackets in half for each job. It works for jobs with similar pay. Otherwise more tax than necessary may be withheld, and the extra grows with the pay gap.
The 2026 Step 4(b) Deductions Worksheet
The 2026 worksheet adds lines for new deductions. The standard deduction it uses is $32,200 for married filing jointly, $24,150 for head of household and $16,100 for single or married filing separately.
Claiming exempt from withholding
To be exempt, an employee must have had no tax liability for the previous year and expect none for the current year. On the 2026 form, they check the Exempt box and complete only Steps 1(a), 1(b) and 5. Exemption covers federal income tax only, not Social Security or Medicare.
Exempt status lasts one calendar year. To stay exempt, the employee gives a new W-4 by February 15, moved to the next business day on a weekend or legal holiday. The 2026 form says the new one is due by February 16, 2027. A form claiming exemption that arrives February 16 or later can apply to future wages, but taxes already withheld aren't refunded.
An employee who claims exemption in 2026 but expects to owe income tax for 2027 must file a new W-4 by December 1, 2026.
W-4 deadlines for employees and employers
Form W-4 has no annual IRS filing date, but several deadlines apply.
- New hire: complete Form W-4 when hired.
- Revised W-4: the employer puts it into effect no later than the start of the first payroll period ending on or after the 30th day after receiving it.
- Change that cuts withholding: if a change in circumstances reduces the withholding an employee can claim, and 2026 withholding won't cover 2026 tax, a new W-4 is due within 10 days. Examples include losing the child tax credit, other credits dropping by more than $500, or deductions dropping by more than $2,300.
- Filing status change: going from married filing jointly to head of household or single, with 2026 tax still covered, means a new W-4 for 2027 by December 1, 2026, or 10 days after the change if later.
Employer rules: invalid forms, lock-in letters and records
Any unauthorized change or addition makes a W-4 invalid, including removing the certification language, material defacing, or writing anything other than the requested entries. Don't use an invalid form. Tell the employee and ask for another, and keep withholding under the prior valid form if there is one.
Once an IRS lock-in letter takes effect, disregard any W-4 that lowers withholding until the IRS says otherwise, but honor one that raises it. Electronic W-4 systems must not let an employee override the lock-in. The rules also apply to employees rehired within 12 months of the notice.
Keep signed Forms W-4 for at least 4 years, and be able to supply a hardcopy of an electronic one. The IRS says to keep all employment tax records for at least four years after filing the 4th quarter for the year.
An employee may face a $500 penalty for a W-4 with no reasonable basis that reduces withholding. Willfully false information can bring a fine of up to $1,000, up to 1 year in prison, or both.
Aldro's bookkeeping at $20 a month covers monthly reconciliation and statements. Payroll processing, where W-4s are applied, isn't included.
Worked example
Jordan starts a server job in 2026, files single, has one child under 17 and expects $8,000 of qualified tips. On Form W-4 she completes Step 1, enters $2,200 in Step 3(a) for her child because her income is under $200,000, and lists $8,000 of tips on the Step 4(b) worksheet (under the $25,000 limit, with income under $150,000). If she later hands in a revised W-4 on March 3, her employer must apply it no later than the first payroll period ending on or after April 2.
Common questions
Who needs to fill out a W-4?
Every new employee. The employer keeps it. Employees with a valid W-4 on file, even from before 2020, don't need a new one unless something changes.
Which steps on the W-4 are required?
Only Step 1 and Step 5. Steps 2 to 4 are for those they apply to.
What happens if an employee doesn't turn in a W-4?
The employer withholds as if the employee is single or married filing separately, with nothing in Steps 2, 3 or 4.
When is the W-4 due for exempt status?
Exempt status lasts one year. The 2026 form says to submit a new W-4 by February 16, 2027 to stay exempt.
How long does an employer have to apply a new W-4?
No later than the start of the first payroll period ending on or after the 30th day after receiving it.
How do I put tips or overtime on my W-4?
On the 2026 Step 4(b) Deductions Worksheet: up to $25,000 of qualified tips and up to $12,500 of overtime ($25,000 joint), if total income is under $150,000 ($300,000 joint).
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Sources
- IRS: Topic no. 753, Form W-4 · checked October 31, 2026
- IRS: Form W-4 (2026) · checked October 31, 2026
- IRS: FAQs on the 2020 Form W-4 · checked October 31, 2026
- IRS: Publication 505 · checked October 31, 2026
- IRS: Employment tax recordkeeping · checked October 31, 2026
This guide explains general rules from the sources listed. It isn’t tax advice for your situation.