To calculate FIT using the 2019 percentage method:

Gross Pay per Period: $60,000 / 24 = $2,500.00.

Pre-tax Deductions: 401(k) (10% of $2,500 = $250), Section 125 ($25), and FSA ($75). Total = $350.00.

Taxable Income: $2,500 - $350 = $2,150.00.

Allowance Value: In 2019, one semi-monthly allowance was $175.00. Two allowances = $350.00.

Adjusted Taxable Income: $2,150 - $350 = $1,800.00.

Apply Tax Table: Using 2019 semi-monthly Single tables, the tax on $1,800 is approximately $203.06 . Payroll professionals must accurately identify which deductions reduce federal taxable income (all of the above) versus those that only reduce FICA (only the Section 125 and FSA deductions) to ensure correct withholding amounts.