Is backup withholding 24% or 28%?

It is 24%. The 28% figure is sometimes quoted for other information-reporting penalties and is not the backup-withholding rate.

Is backup withholding refundable?

Yes. The amount withheld is reported on the 1099 and credited against the payee's tax on the return, so over-withholding comes back as a refund.

Does backup withholding apply to wages?

No. Wages are covered by Form W-4 withholding. Backup withholding applies to reportable payments such as interest, dividends, rents, royalties and payments to contractors.

Can a payer choose not to backup withhold?

No. Once a condition in the rules applies, the payer is required to withhold; choosing not to exposes the payer to liability for the amount that should have been withheld.

Backup withholding: the 24% rule

Last verified 2026-11-02 · Sources: IRS Topic no. 307 · Report an error

Backup withholding is a flat 24% that a payer must take from reportable payments when the payee's taxpayer identification number is missing or the IRS has notified the payer. It is not income tax withholding and it is not a penalty on the payee.

What comes out of a payment

Enter a reportable payment to see the 24% and what reaches the payee.

Payment amount

When a payer has to withhold 24%

Situation	What happens
The payee does not give a TIN in the required way	24% is withheld from reportable payments
The IRS tells the payer the TIN is incorrect	24% until a correct TIN is provided
The IRS sends a notice to start backup withholding	24% until the IRS says to stop
The payee underreported interest or dividends	24% on those payments

Source: IRS Topic no. 307, which states the payer "must withhold at a flat 24% rate" in these cases.

How to stop it

Give the payer a completed Form W-9 with the correct name and TIN. A payer cannot accept a verbal number for backup-withholding purposes in most cases, and cannot simply stop withholding because the payee asks. If the IRS issued the notice, the payer needs a corrected TIN or an IRS letter before it can stop.

Backup withholding is not the same as regular withholding

	Backup withholding	Regular withholding
Rate	Flat 24%	From the W-4 and the percentage-method tables
Applies to	Reportable payments such as 1099 income	Wages
Chosen by	Not chosen: it is triggered by a missing or bad TIN	The employee, on Form W-4
Stops when	The TIN problem is fixed	The employee files a new W-4

Frequently asked questions

Is backup withholding 24% or 28%?: It is 24%. The 28% figure is sometimes quoted for other information-reporting penalties and is not the backup-withholding rate.
Is backup withholding refundable?: Yes. The amount withheld is reported on the 1099 and credited against the payee's tax on the return, so over-withholding comes back as a refund.
Does backup withholding apply to wages?: No. Wages are covered by Form W-4 withholding. Backup withholding applies to reportable payments such as interest, dividends, rents, royalties and payments to contractors.
Can a payer choose not to backup withhold?: No. Once a condition in the rules applies, the payer is required to withhold; choosing not to exposes the payer to liability for the amount that should have been withheld.

Sources and date.
IRS Topic no. 307, Backup withholding
IRS Form W-9
All figures verified on 2026-10-30.