Does the Fed. Income tax rate keep changing ?.

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Q. I have recently joined a new job (with a better salary :-)). However, I noticed in my first paycheck that the Fed. income tax is about 20% rather than 18% in my previous paychecks. In both jobs I fall in 28% bracket. Does the Fed. Income tax rate keep changing ?. Is there a way you we have any control on this. Much of my wage increase is eroded because of this tax rate difference. Another minor question, what is SUI/DUI ?. It was not deducted before, but was deducted in my new paycheck.

A. Question: I have recently joined a new job (with a better salary :-)). However, I noticed in my first paycheck that the Fed. income tax is about 20% rather than 18% in my previous paychecks. In both jobs I fall in 28% bracket. Answer: The amount of money withheld for taxes is based on what you have declared on your W-4. The reason that you see 18-20% withheld even though you are in the "28%" bracket comes from two factors. The first is that the tables make some assumptions on your deductions (standard) - married or single and exemption credits - minimum of one (you). For 1995 the first $ 5400 of you earnings were not taxes at all (I'm giving you example for single - no dependents) - that next $23,350 was taxed at a rate of 15%. Only the amount above that is taxed at 28%. The shift to 20% withholding probably reflects that more of your income is going to be taxed at the 28% level because you have a better salary. These tables also don't know the difference between a married fellow with three kids and a huge mortgage so he itemizes - and a single person with standard deduction. That's why they have those worksheets with the W-4. Question: Does the Fed. Income tax rate keep changing ?. Is there a way you we have any control on this. Much of my wage increase is eroded because Answer: of this tax rate difference. The tax rate itself is not changing - except for the annual adjustments - The real point though is only partly how much they are withholding now, but how close to the amount of tax due is your withholding. If you are getting a big refund - you could reduce your withholding so you get more in the checks. If you owe big amounts, increase your withholding - you don't want to pay penalties. Question: Another minor question, what is SUI/DUI ?. It was not deducted before, but was deducted in my new paycheck. Answer: SUI is probably State Unemployment Insurance. - In California we have SDI. (It is tax deductible on the Federal return if you itemize.) All companies are required to either withhold this or provide "private" insurance. These are not tax deductible. It is possible that your former company had a voluntary program and that they paid it for you as a perk.

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