Withholding Tax Explained: Everything You Need to Know
For employees, withholding tax simplifies tax payment by ensuring that taxes are deducted directly from their salaries. This system reduces the burden of making large tax payments at year-end. The deducted amount varies based on salary levels, deductions, and exemptions. Employees should review their withholding tax details regularly to prevent underpayment or overpayment. Any excess tax withheld can be claimed as a refund when filing tax returns. Understanding withholding tax rates and personal allowances helps employees plan their finances better. Governments use this system to maintain financial stability and ensure efficient tax collection from the workforce.