IRS Publication 15-A – In the complex world of employment taxes, staying compliant is essential for businesses of all sizes. IRS Publication 15-A, also known as the Employer’s Supplemental Tax Guide, serves as a critical supplement to Publication 15 (Circular E), providing in-depth guidance on specialized topics like employee classification, withholding rules, and special compensation scenarios. This guide is particularly valuable for employers navigating nuanced tax obligations, ensuring accurate withholding, reporting, and deposits for federal income, social security, Medicare, and FUTA taxes. Released for use in 2026, it incorporates updates reflecting recent legislative changes, making it a must-read for HR professionals, payroll managers, and business owners.
What’s New in the 2026 Edition of IRS Publication 15-A?
Each year, the IRS updates Publication 15-A to align with new tax laws and wage bases. For 2026, key changes include adjustments to social security and Medicare tax parameters. The social security tax rate remains 6.2% for both employers and employees, with a wage base limit increased to $184,500. The Medicare tax rate is steady at 1.45% each, with no wage base limit. These rates apply to various workers, including household employees paid $3,000 or more in cash wages and election workers compensated $2,500 or more.
Another significant update stems from Public Law 119-21, the One Big Beautiful Bill Act, which permanently eliminates moving expense reimbursements for most employees, except for active-duty U.S. Armed Forces members and certain intelligence community personnel. Additionally, this law introduces employer contributions to “Trump accounts”—a new type of traditional IRA for children under 18—with an annual limit of $5,000 (indexed for inflation after 2027). Employers can contribute up to $2,500 per year (also indexed after 2027) under a written plan, and these amounts are excluded from the employee’s gross income.
Employers should also note the permanent extension of individual tax rates from the Tax Cuts and Jobs Act, affecting supplemental wage withholding at 22% (or 37% if over $1 million in a year). For detailed calculations, refer to Publication 15-T for withholding methods.
Key Sections of IRS Publication 15-A: A Breakdown
Publication 15-A is organized into eight main sections, each addressing specific aspects of employment taxes. Below is an overview of the core topics to help employers apply the guidance effectively.
Section 1: Who Are Employees?
Determining worker status is foundational to tax compliance. The guide categorizes workers as independent contractors, common-law employees, statutory employees, or statutory nonemployees. Common-law employees are those under behavioral, financial, and relational control by the employer. Statutory employees include certain drivers, life insurance agents, home workers, and traveling salespeople who meet specific criteria, such as performing services personally with minimal investment.
Statutory nonemployees, like direct sellers, licensed real estate agents, and companion sitters, are treated as self-employed for all tax purposes. Misclassifying workers can lead to penalties, but relief is available if there’s a reasonable basis for the classification and consistent treatment. Employers unsure about status can file Form SS-8 for an IRS determination.
Section 2: Employee or Independent Contractor?
This section delves into the common-law rules for classification, emphasizing three factors: behavioral control (instructions and training), financial control (expenses, investments, and profit/loss potential), and relationship type (contracts, benefits, and permanency). Industry-specific examples, such as those in construction, trucking, and sales, illustrate how these factors apply in real-world scenarios. For instance, a contractor who provides their own tools, advertises services, and bears profit/loss risk is likely independent, while a supervised hourly worker is an employee.
Section 3: Employees of Exempt Organizations
Tax-exempt organizations under section 501(c)(3), like charities and schools, must withhold income taxes but have special rules for social security, Medicare, and FUTA. These taxes generally apply unless wages are under $100 annually or the organization files Form 8274 to oppose them on religious grounds. FUTA is exempt for 501(c)(3) entities. The guide also covers excise taxes on excess executive compensation via Form 4720.
Section 4: Religious Exemptions and Special Rules for Ministers
Ministers are often treated as self-employed for social security and Medicare but as employees for income tax withholding. Exemptions via Form 4361 or 4029 are available for those with religious objections. Housing allowances are reported separately and may be excludable.
Section 5: Wages and Other Compensation
This comprehensive section outlines what counts as taxable wages, including scholarships, outplacement services, back pay, golden parachutes, and nonqualified deferred compensation. Employee achievement awards up to $400 (or $1,600 under a qualified plan) are excludable if tangible and meaningful. Employer-paid employee taxes increase reported wages, with a 2026 factor of 0.9235 for calculations when stated pay is $170,385.75 or less.
New for 2026: Employer contributions to Trump accounts are excludable up to $2,500.
Section 6: Sick Pay Reporting
Sick pay for temporary absences due to injury or illness is subject to taxes, with rules varying by payer (employer, agent, or third party). Exemptions apply after six months or if fully employee-funded. Reporting uses Form W-2, with specific boxes for taxable amounts and codes like “J” for nontaxable portions. Third-party payers may transfer liability, requiring Form 8922 for discrepancies.
Section 7: Special Rules for Paying Taxes
Covers common paymasters for related corporations, agents using Form 2678, and international social security agreements to avoid dual taxation. If an employer pays an employee’s share of taxes, it increases wages subject to further taxation.
Section 8: Federal Income Tax Withholding on Retirement Payments and Annuities
Details withholding for pensions, annuities, and IRAs using Forms W-4P (periodic) and W-4R (nonperiodic). Default rates are 10% for nonperiodic and 20% for eligible rollovers. Special rules apply for non-U.S. payments and nonresident aliens.
How to Use IRS Publication 15-A Effectively?
To maximize this guide, cross-reference it with Publication 15 for basic rules and Publication 15-T for withholding tables. Download the PDF from the IRS website or order printed copies. For electronic filing and payments, use EFTPS or IRS e-file services. If facing a worker classification audit, consult Publication 5146. Always check IRS.gov for the latest developments, as legislation can impact guidance post-publication.
Conclusion: Stay Compliant with IRS Publication 15-A
IRS Publication 15-A is an indispensable resource for mastering supplemental employment tax rules in 2026. By understanding employee classifications, special compensation, and reporting requirements, employers can avoid costly errors and ensure smooth payroll operations. For personalized advice, consult a tax professional or visit IRS.gov for free tools and helplines.