What is a W-4 Form? Everything HR Leaders Need to Know

Employees use IRS Form W-4 to let their employers know the amount they’d like withheld to pay for federal income taxes on each paycheck. Whether you’re onboarding new employees or managing existing ones, understanding the W-4 form ensures accurate tax withholding and compliance with federal regulations. This comprehensive guide walks you through everything you need to know about W-4 forms, including updates for 2025.

What is a W-4 Tax Form?

The W-4 tax form, officially known as the Employee’s Withholding Certificate, is a critical document in the payroll and tax compliance process. Employees complete this form when they begin a new job or need to adjust their tax withholding due to changes in their financial or personal circumstances, such as marriage, the birth of a child, or an additional job.

History of the W-4 Form

For decades, the basis of federal income tax withholding from employees has been marital status and number of allowances. Employees and employers formerly used terminology such as “Married-3” or “Single-2.” But those designations changed in 2017 when Congress eliminated withholding allowances as the basis for federal income tax calculation.

Today, Form W-4 aligns the employee’s withholding elections with the language in federal tax code. Taxpayers whose income is under $400,000 (married filing jointly) or $200,000 (other filing statuses) must multiply the number of qualifying children under 17 by $2,000 and any other dependents by $500 and enter those dollar figures on the form.

What is the Purpose of a W-4 Form?

The federal income tax is a pay-as-you-go tax: you must pay the tax as you earn or receive income during the year. Employees use Form W-4 to let their employer know the amount to withhold and pay for federal income taxes on each paycheck. An employee’s elections on Form W-4 provide the employer with the factors needed to accurately calculate withholding.

If an employee does not correctly fill out a W-4, too little tax may be withheld and result in the person owing tax to the IRS when they file their individual return, including potential penalties. If too much federal tax is withheld per paycheck, the individual will overpay the IRS and will receive a refund at the end of the tax year.

W-4 Form vs W-2: What’s the Difference Between the Two?

While a W-4 must be filled out by the employee to show their desired tax withholdings, the employer is required to issue a W-2. The W-2 provides a summary of an employee’s earnings and taxes withheld for the year, which is used to file income tax returns.

A W-4 is completed at the start of employment or after major life changes. Employers issue W-2s to both the employee and the IRS annually.

Is There a New W-4 for 2025?

The IRS released a new Form W-4 for 2025. Changes made are minor and for informational purposes. The form has largely stayed the same since the overhaul in 2020.

What Changed for Employees?

Not much. The IRS doesn’t require employers to update all existing employees to 2025 W-4 forms. However, if an employee wanted to make any changes to their federal withholding elections in 2025, they’ll have to use the new form.

Form changes for the year include:

• The general instructions on page two include more instances when you’d want to use the estimator, including
  • If you are submitting the form after the beginning of the year
  • If you have changes during the year in your marital status, number of jobs, or number of dependents
• The above information is also added as a tip between steps one and two on the first page of the form.
• The annual taxable wage numbers have been adjusted, as they are each year, to account for inflation.

If it’s been a while since an employee has completed a W-4, it’s important to note that the 2017 Tax Cuts and Jobs Act made some significant updates to the tax code, one of which was to nearly double the standard deduction (from $6,500 to $12,000 for single filers and from $13,000 to $24,000 for joint filers). The standard deductions have increased for 2025, as shown in the table below.

How to Fill Out a W-4

Employees can elect to withhold federal income taxes based on marital status alone if married and not filing jointly with their spouse who is also employed. To do this, the employee completes only the first step (Enter Personal Information) with their name, address, Social Security number, and filing status, and step five where they sign and date the form. The result should be less confusion and less time spent navigating the form. It is within optional steps two through four on the redesigned Form W-4 where the changes begin.

Married Status Box

Married taxpayers or taxpayers who have dependents or more than one job need to do a little more work. Step two asks the employee to specify whether they hold multiple jobs or have a spouse who is also employed. If the answer is “yes,” they have to complete step two, and then fill out steps three and four for just one of the jobs (for the most accurate calculation, the IRS says to use the highest paying job).

Point these employees to step 2a of the 2025 Form W-4, which helpfully provides a Tax Withholding Estimator calculator to guide employees through the process of estimating their withholdings.

The calculator:

• Accounts for credits and deductions
• Estimates whether the taxpayer will owe or receive a refund based on current withholdings and the amount of tax owed for the rest of the year
• Provides guidance for the steps to take if the taxpayer wants a tax refund or if they’d rather get the amount owed as close to zero as possible

To use the calculator, information from the employee’s pay stubs and prior year tax return should be gathered including:

• Total amount of wages expected to be paid for the year
• Amount of any bonuses
• Total federal income tax withheld
• Amount of income tax withheld from the last paycheck

Step three is where the employee can claim dependent exemptions and deducts the $2,000 per-child tax credit out of their withholding ($500 for non-child dependents). And step four is where employees can make additional adjustments, including having tax withheld for additional income (e.g., interest, dividends, or retirement income) or calculate if they choose to itemize their deductions at tax time rather than using the standard deduction.

How To Help an Employee Fill out a W4

While HR can’t provide tax advice, there are ways to help employees understand the form’s purpose and structure. Here’s how to assist your team members:

First, explain that the W-4 is simply a way for employees to control their tax withholdings. It’s not a tax return – it just tells employers how much tax to withhold from each paycheck. This helps prevent employees from owing a large sum at tax time or getting too large a refund.

Some employees may prefer the simplest approach: if they’re single, or married with a spouse who doesn’t work, they can just complete Step 1 (personal information) and Step 5 (signature). Let them know this is perfectly acceptable – they don’t need to feel overwhelmed by the optional sections.

When walking through the form, break it down into digestible parts:

• Step 1: Personal information and filing status
• Step 2: Multiple jobs or working spouse (optional)
• Step 3: Claiming dependents (optional)
• Step 4: Other adjustments (optional)
• Step 5: Signature

Help employees understand that they can update their W-4 at any time. If their life circumstances change – marriage, new child, new job – they can submit a new form. This often relieves anxiety about getting everything perfect the first time.

Remind employees that their tax information is confidential. HR’s role is to process the form, not to review or question their choices. This helps create trust and encourages employees to ask questions when needed.

W-4 Form FAQs

Still have questions regarding payroll taxes or W-4s? We have answers!

Who Needs to Fill Out a W-4 Form?

Employees need to fill out a W-4 form when starting a new job or if they want to update their federal income tax withholding due to changes in their financial or personal situation, such as getting married, having a child, or taking on a second job.

What is a W-4 “Lock-in” Letter?

A “lock-in” letter is an official order sent by the IRS to an employer instructing them to withhold tax from a specific employee at a determined rate. This is only deemed necessary when an employee has routinely requested too small an amount to be withheld. After a “lock-in” letter has been received, any further W-4 which the employee submits requesting a lower withholding amount will not be valid, until approved by the IRS.

When Does all W-4 Information Need to be Filed?

Employees should file their W-4 information when starting a new job or as soon as possible after experiencing a major life or financial change, such as marriage, divorce, having a child, or taking on additional employment. Employers must ensure the W-4 is submitted before the first payroll period when the employee starts work or updates their withholding.

Should You Fill Out a New Form W-4?

It’s not necessary to fill out a new Form W-4 if your financial situation has remained the same. However, if you’ve married, divorced, had children, changed jobs, or added a job, it’s important to fill out a new form to ensure your withholding is correct.

What Do Employers Need to Do When They Receive a W-4?

After receiving an employee’s W-4, employers must use the submission to calculate the exact amount of tax they will need to withhold for each pay period. They can do this using IRS withholding tables, either using the wage bracket method (for manual payroll systems) or the percentage method (for automated payroll systems).

Employers have 30 days from receiving a W-4 to implement the changes into their payroll process. Keep in mind, the IRS may request to see a specific employee’s submission, so be sure to file W-4 forms in an accessible location.

If an employee doesn’t submit a W-4, employers must withhold at the standard rate that applies for single filers with no other adjustments.

Make W-4 Form Filing Easier

We’re proud to keep more than 30,000 organizations informed and compliant with federal and state laws and regulations. Since 1990, Paycor has maintained a core expertise in payroll and compliance. We established our compliance expertise in the Cincinnati tri-state area, one of the most complex tax jurisdictions in the country, which is why we’re able to handle payroll and tax complexities in a way our competitors can’t. Learn more with a guided product tour.

If you’re a Paycor customer and still have unanswered questions, please contact your payroll specialist for more support.