How to Calculate Oklahoma State Taxes for Payroll

The employer includes state income tax withholding on the employee's pay stub.

Oklahoma employers are required to withhold federal income tax, Social Security tax and Medicare tax from Oklahoma employees' paychecks. The employer pays federal payroll withholding to the Internal Revenue Service. Additionally, Okalahoma is one of the many states that charge a state income tax to employees. Oklahoma employers are required to withhold the tax from employees' income and pay it to the Oklahoma Tax Commission. The employer calculates state income tax according to the tax commission's guidelines.

Things You'll Need

• Form W-4
• Oklahoma Withholding Tax Tables

Instructions

1. Consult the employee's W-4 form to determine the employee's withholding conditions. Oklahoma is one of the few states that require employers to use IRS Form W-4 for state income tax withholding purposes. Check Line 3 of the W-4 for the employee's filing status and Line 5 for her allowances.

2. Apply the Oklahoma withholding tax tables' wage bracket method to figure state income tax withholding. Use this method if the employee's wages are within the wage bracket's income range. Suppose the employee claims married with two allowances. He earns $350 weekly. According to page 11 of the 2010 Oklahoma withholding tax tables, the state income tax withholding is $1.

3. Apply the percentage method in any situation, including if the employee's earnings exceed the wage bracket's income limit. Obtain the amount allowed for each allowance based on the employee's payroll period. For example, for a weekly pay period in 2010, the employee gets $19.23 for each withholding allowance. Subtract the total withholding allowances amount from the employee's gross wages to arrive at the taxable income. Then use the percentage tax table that corresponds with the employee's pay period and filing status to figure the withholding tax.

Tips & Warnings

• Withhold Oklahoma state income tax and federal income tax at single with zero allowances if the employee fails to submit a W-4 form.

• Perform tax reporting with the Oklahoma Tax Commissioner, according to the schedule it mandates. In most cases, quarterly or monthly reporting is required.

• Use IRS Circular E and the employee's W-4 form to figure federal income tax withholding. Compute Social Security tax at 6.2 percent of gross income, and Medicare tax at 1.45 percent.

References

• StateW4: Form W-4
• Oklahoma Tax Commission: Oklahoma Income Tax Withholding Tables 2010
• IRS: 2010 Circular E