Calculation Methods for Federal Income Tax

You can use these calculation methods for federal income tax (FIT).

Calculation method	Earnings types	What it does
Annualized	Regular	Default tax method for Regular earnings. Annualizes the earnings by multiplying them by the annual number of pay periods. Subtracts the applicable allowance and standard deductions. Calculates the tax for the year. Divides this amount by the annual number of pay periods. For period-to-date tax calculations: Includes the earnings in all Regular runs for the period. Subtracts any tax taken in previous runs from the period-to-date tax.
Cumulative	Regular Regular and Supplemental Supplemental	Select this method on the Federal component of the employee's Tax Withholding card. For further info, see Cumulative Tax Withholding in the Help Center.
Tiered Flat Rate	Supplemental	Default method for supplemental payroll runs. The payroll process applies the appropriate flat percentage as set by the IRS.
Previous Aggregation	Supplemental	Adds the current run's Supplemental earnings to any Regular or Supplemental earnings already processed for the current run. If there aren't any Regular or Supplemental earnings in the current period, it aggregates the Regular earnings from the prior period. If there aren't any Regular earnings in the prior period, it annualizes the current run's Supplemental earnings against themselves. Calculates the tax. Subtracts any tax already withheld in the current or prior period from this result.
Concurrent Aggregation	Regular and Supplemental	This is the default method for Regular and Supplemental payroll runs. Adds the Supplemental earnings to the Regular earnings. Uses the Annualized method to calculate the tax.
Tiered Flat Rate Combined	Regular and Supplemental	Calculates taxes on Regular earnings using the Annualized method. Calculates taxes on Supplemental earnings using the Tiered Flat Rate method.