The wage brackets for income tax withholding are outlined by the IRS in IRS Publication 15 (Circular E), Employer's Tax Guide
(released early each calendar year), page 43, 17. How To Use the Income Tax Withholding Tables.
Wage Bracket Method
Under the wage bracket method, find the proper table (on pages 47–66) for your payroll period and the employee's marital status as shown on his or her Form W-4. Then, based on the number of withholding allowances claimed on the Form W-4 and the amount of wages, find the amount of income tax to withhold. If your employee is claiming more than 10 withholding allowances, see below.
If you can't use the wage bracket tables because wages exceed the amount shown in the last bracket of the table, use the percentage method of withholding described below. Be sure to reduce wages by the amount of total withholding allowances in Table 5
before using the percentage method tables (pages 45–46).Percentage Method
If you don't want to use the wage bracket tables on pages 47–66 to figure how much income tax to withhold, you can use a percentage computation based on Table 5
below and the appropriate rate table. This method works for any number of withholding allowances the employee claims and any amount of wages.
Wage ranges based on the percentage method of annual
wages for a single individual (after subtracting withholding allowances) for wages paid in 2017 are as follows:
The 00.0% bracket applies to wages up to $2,300
The 10.0% bracket starts when wages exceed $2,300
The 15.0% bracket starts when wages exceed $11,625
The 25.0% bracket starts when wages exceed $40,250
The 28.0% bracket starts when wages exceed $94,200
The 33.0% bracket starts when wages exceed $193,950
The 35.0% bracket starts when wages exceed $419,000
The 39.6% bracket starts when wages exceed $420,700