What does flat rate tax withholding mean?

Flat rate tax withholding refers to a specific percentage that is applied uniformly to all earnings, regardless of the individual's total income level. This method simplifies the withholding process by using a fixed percentage to determine how much tax should be withheld, making it straightforward and consistent across different pay periods.

This approach is commonly used for certain types of income, like supplemental wages, where a standard percentage rate is applied to ensure that the correct amount of tax is withheld without consideration of other income sources or tax brackets. It provides clarity for both employers and employees in managing payroll taxes, facilitating easier calculations and predictable deductions from paychecks.