An easy way to calculate payroll taxes is to use one of the many online calculators, such as the one by Intuit’s Quickbooks. The tool calculates and displays the state and federal withholding amounts based on input from the user regarding the state, pay rate, pay period and gross pay.
The free tool from Intuit Quickbooks has the ability to calculate the taxes for hourly and salary employees. By using a payroll tool, a payroll clerk doesn't need to continuously update the tax tables. For those who are inclined to do the math themselves, the formula is fairly simple as long as they have the current tax table and know the exemption amount for each allowance on the employee’s W-4 form.
As of 2015, the tax rates are determined by the marital status of the employee and her tax bracket, notes Washington State University. First, calculate the value of any withholding allowances. Next, deduct any pre-tax contributions and the withholding allowance from the gross pay amount to determine the taxable gross wages. Finally, determine the tax bracket the employee falls into and reduce the gross pay by the base amount and the percentage mandated by the tax table. The result is the final wage to be paid.