Backup Withholding Rate

Backup Withholding Rate
TCJA reduced rate

The TCJA reduced the backup withholding tax rate to 24 percent. When it applies, backup withholding requires a payer to withhold tax from payments not otherwise subject to withholding.

Payments subject to backup withholding include (but are not limited to):

  • Interest payments;
  • Dividends;
  • Rents, profits or other income;
  • Commissions, fees or other payments for work performed as an independent contractor;
  • Payments by brokers and barter exchange transactions;
  • Payment card and third-party network transactions; and
  • Royalty payments.

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