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Substantially Similar Methods


If other withholding methods are not satisfactory for an employer’s payroll system, he/she may devise any method of withholding which yields amounts which are substantially similar to amounts which would be produced under the percentage method of withholding for the payroll periods involved.

The results of an employer-devised method will be considered substantially similar if the amount of tax withheld comes within the following tolerances:

  1. If the tax which would be withheld using the annual percentage method is $10 to $100, the annual deviation, using the employer-devised method, shall not exceed $10, plus 10 per cent of the excess over $10;
  2. If the tax which would be withheld using the annual percentage method is $100 to $1,000, the annual deviation, using the employer-devised method, shall not exceed $19, plus 3 per cent of the excess over $100; and
  3. If the tax which would be withheld using the annual percentage method is $1,000 or over, the annual deviation, using the employer-devised method, shall not exceed $46, plus one per cent of the excess over $1,000. Any amount which is within $10 per year of the amount which would be withheld using the annual percentage method will be acceptable.


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Helpful Hint... Anytime you move or have a major life change (for example - marriage, divorce, birth of a child, etc.) always be sure to complete a new W-4!