WITHHOLDING TAX.

SEC. 105. WITHHOLDING TAX. (a) In General.—Subsection (a) of section 3402 (relating to income taxes collected at source) is amended to read as follows: “(a) Requirement of Withholding.—Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables prescribed by the Secretary. With respect to wages paid after May 31, 1977, and before January 1, 1979, the tables so prescribed shall be the same as the tables prescribed under this subsection which wore in effect, on January 1, 1976; except that such tables shall be modified to the extent necessary so that, had they been in effect for all of 1977, they would reflect the full year effect of the amendments made by sections 101 and 102 of the Tax Reduction and Simplification Act of 1977. With respect to wages paid after December 31, 1978, the tables so prescribed shall be the same as the tables prescribed under this subsection which were in effect on January 1, 1975, except that such tables shall be modified to the extent necessary to reflect the amendments made by sections 101 and 102 of the Tax Reduction and Simplification Act of 1977. For purposes of applying such tables, the term ‘the amount of wages’ means the amount by which the wages exceed the number of withholding exemptions claimed, multiplied by the amount of one such exemption as shown in the table prescribed under subsection (b)(1).” (b) Technical and Conforming Amendments.— (1) Paragraph (1) of section 3402(f) (relating to withholding exemptions) is amended— (A) by striking out “a standard deduction” in subparagraph (G) and inserting in lieu thereof “a zero bracket”, and (B) by striking out “standard deduction” in the sentence following subparagraph (G) and inserting in lieu thereof “zero bracket”. (2) Subparagraph (B) of section 3402(m)(1) (relating to withholding allowances based on itemized deductions) is amended to read as follows: “(B) an amount equal to $3,200 ($2,200 in the case of an individual who is not married (within the meaning of section 143) and who is not a surviving spouse (as defined in section 2(a))).” (3) Section 3402 (m) (2) (relating to definitions) is amended— (A) by striking out “sections 141 and” in subparagraph (A) and inserting in lieu thereof “section”, (B) by striking out “(or the amount of the standard deduction)” in subparagraph (A) and inserting in lieu thereof “(or the zero bracket amount (within the meaning of section 63(d)))”, and 91 STAT. 141 (C) by striking out “(or the standard deduction)” in subparagraph (C) and inserting in lieu thereof “(or the zero bracket amount)”.