Posted on October 1, 2026
September saw steady, moderate growth in federal tax withholding with no major news. We estimate that growth in federal tax withholding–that is, the overall amounts of income and payroll taxes that employers withhold from workers’ paychecks and remit to the Treasury Department as soon as the day after the workers are paid–remained stable in September. Specifically, withholding in September grew by an estimated 5.6 percent on a year-over-year basis (comparing the amounts in September 2026 to those from September of a year ago), just about the same as the estimated 5.5 percent year-over-year growth in August. That growth is faster than the rate of inflation plus employment growth, plus a small increase in average income tax rates from economic growth. Thus, it appears from the withholding data that inflation-adjusted, economywide wages and salaries per worker are growing at a moderate, steady pace. (Note that our estimates remove the estimated effects of federal tax legislation and the month-to-month variation from the calendar.)
