Why do more allowances result in more Iowa withholding?
In some cases, withholding amounts on the withholding tax table for a given income will actually rise as the number of allowances increases. This is because federal tax is deductible when calculating state tax. Federal tax will decline as the number of allowances increases, resulting in a smaller deduction when calculating Iowa tax. Because of this, state withholding amounts may increase even though the number of allowances claimed increased.
Related Questions
- The amount of federal income tax withheld from employees’ paychecks depends on their marital status, the number of withholding allowances (exemptions) they claim on Form W-4, and their projected annual income Q: What is Federal Unemployment Tax (FUTA)?
- How is the number of employee withholding allowances determined?
- Why do more allowances result in more Iowa withholding?
