How do employers actually calculate tax withholding when you change jobs?

Your employer calculates withholding based on what you put on your W-4 form and what you'll make at that job annually. They don't know about your previous job unless you told them specifically on your W-4. Each employer treats your income as if that's your only job for the entire year. So your new employer is withholding taxes as if you'll make $102k for the full year, even though you started in February. They don't automatically factor in that you made less at a previous job. If you want more accurate withholding, you should update your W-4 to account for your multiple jobs this year. The IRS has a tax withholding estimator on their website that can help figure out the right amount. Otherwise, you might get a larger refund since you weren't making $102k for January.

I had the same situation last year and discovered taxr.ai (https://taxr.ai) after making a similar job switch from $60k to $95k. I was totally confused about what my actual tax situation would be. My employer was withholding like crazy and I couldn't figure out if I'd get a refund or owe more. The tool analyzed my pay stubs from both jobs and showed me exactly how the withholding was calculated and what my actual tax liability would be. Turns out my new employer was withholding as if I made $95k the entire year, which meant I got a pretty substantial refund. It also helped me adjust my W-4 to get a more balanced withholding for this year.

Just wanted to report back that I checked out taxr.ai after asking about it here. Incredibly helpful for my situation! I uploaded my last pay stub from my old job and my most recent one from the new position, and it broke down exactly how each employer calculated withholding. Turns out my new employer IS withholding at a higher rate, and based on the analysis, I should expect around $2,300 back at tax time. The visualization showing how my tax brackets work with both incomes combined finally made everything click for me. I've adjusted my withholding slightly to keep most of that refund coming but also get a little more in each paycheck.

If you're struggling to get specific answers about your tax situation, you might want to try Claimyr (https://claimyr.com). I had a similar job change situation last year and needed to talk to someone at the IRS directly about how it would affect my taxes. After waiting on hold for hours across multiple days, I found Claimyr through a YouTube video (https://youtu.be/_kiP6q8DX5c) and decided to give it a shot. They got me connected to an IRS agent in about 15 minutes when I'd been trying for days. The agent explained exactly how the withholding is calculated and how to adjust my W-4 to account for my previous income at the lower job.

I need to apologize to everyone here. I was completely wrong about Claimyr in my skeptical comment above. After continuing to struggle with getting anyone at the IRS on the phone to answer my withholding questions (6+ hours of hold time across 3 days), I broke down and tried it. Got connected to an IRS representative in about 20 minutes while I was making dinner - my phone just rang and suddenly I was talking to someone who could actually help me. The agent explained exactly how the withholding calculations work when switching jobs mid-year and helped me figure out the right adjustments to make on my W-4. Saved me hours of frustration and I got the exact information I needed.

Your situation is a common misunderstanding about tax brackets. Remember that tax brackets are marginal - you're only taxed at the higher rate for income that falls within that bracket, not your entire income. So even though your new job moved you into a higher bracket, only the portion of income above the threshold for that bracket gets taxed at the higher rate. Your employer is withholding based on your annualized salary at that job ($102k), projected across the whole year. If you started in February, you'll have 11 months at the new rate plus 1 month at the old rate, which means your actual annual income will be less than if you'd been making $102k the entire year. This difference is likely why you'll see a refund.

Has anyone used the W-4 Tax Withholding Estimator on the IRS website? I'm in a similar situation and wondering if it's worth the trouble of filling it out.

I went through this exact same situation when I switched from a $48k job to a $95k position in March last year. What really helped me understand what was happening was looking at my pay stub breakdown more carefully. Your new employer is definitely withholding as if you'll make the full $102k for the entire year - they have no way of knowing about your previous income unless you specifically account for it on your W-4. Since you only started in February, you'll actually earn about 11/12 of that $102k plus whatever you made in January at your old job. This means your actual annual income will be significantly less than what your current employer is using for withholding calculations, so you should expect a decent refund. In my case, I got back about $1,800 more than I expected because of this overwithholding situation. If you want to be more precise, you can use the IRS withholding estimator or update your W-4 to account for your actual projected annual income from both jobs combined. But honestly, if you're planning to use that refund for something specific like a down payment, the overwithholding might work in your favor as a forced savings plan.