Employers calculate federal income tax withholding amounts based on information supplied by employees in Forms W-4, while Social Security and Medicare taxes are based on fixed percentages, reports the IRS. Employees are able to estimate withholding amounts for Forms W-4 using an online withholding calculator on the IRS website.
The information employees provide in Forms W-4 includes marital status and withholding allowances, according to the IRS. An employee may indicate a specific amount to withhold in addition to the minimum amount required by his filing status, or claim fewer allowances than he is eligible to claim, if he wants to withhold extra tax to pay for outside sources of income. When circumstances change, an employee must provide a new Form W-4. To calculate how much income tax to withhold from each paycheck, the employer uses the information on the Form W-4, the gross pay of the employee, the length of the payroll period and IRS tables, reports About.com.
The rate for Social Security tax, as of 2015, is 12.4 percent of income, of which the employee pays 6.2 percent, and the employer pays 6.2 percent, states the IRS. The wage base limit for Social Security taxes is $118,500. Medicare tax is 2.9 percent of income, split evenly between the employee and employer. However, Medicare has no wage base limit, and employees must pay an extra annual Medicare tax of .9 percent on earnings over $200,000 that employers do not have to match.