Federal Income Tax Withholding

Defense Finance
and Accounting Service
Providing payment services of the U.S. Department of Defense
MyPay

Federal Income Tax Withholding

Your federal income tax withholding, or FITW, is determined by the DD Form 2656 you completed at the time of your military retirement or by subsequent W-4 Form on file with DFAS. This information establishes the marital status, exemptions and, for some, non-tax status we use to calculate how much money to withhold from your taxable income for your annual tax liability.

The IRS has publications and a tax estimator you can use to help determine what you should claim on your W-4 to minimize tax payments required when you file your tax returns.

Changing your Federal Income Tax Withholding (FITW)

Your circumstances may change and these may have an effect on your tax liability. When this happens, you can adjust your federal income tax withholding in myPay or by submitting a new W-4 (for retirees) or W-4P (for annuitants). You should talk to a tax advisor or review IRS guidance before doing so.

If your FITW isn’t enough to satisfy your tax obligations, you may choose to have an additional amount withheld. Some may also elect to have a flat amount withheld by writing “Withhold additional FITW only” on their W-4 or W-4P.

The easiest, most secure and fastest way to change your tax withholding is by using your myPay online account.  All the information you would include on your W-4 or W-4P can be provided via myPay’s secure connection on your home computer.

Or, mail or fax your signed, completed forms: 

Send IRS W-4 Form for Retirees to:
Defense Finance and Accounting Service
U.S. Military Retirement Pay
8899 E 56th Street
Indianapolis, IN 46249-1200

Fax: 1-800-469-6559

Send IRS W-4P Form for Annuitants to: 
Defense Finance and Accounting Service
U.S. Military Annuitant Pay
8899 E 56th Street
Indianapolis, IN 46249-1300

Fax: 800-982-8459

Filing a Withholding Exemption

If you claim your retirement pay should be entirely exempt from Federal Income Tax Withholding (FITW), the IRS requires that you re-certify this status each year by submitting a new W-4 Form no later than Dec. 15 of each year. If you do not re-certify your "Exempt" status, your FITW status will default to "Single" with zero exemptions as of your Feb. 1 payment. Please allow 30 days for processing of your request.

Additional Information

If you are considering changing your federal tax withholding, please talk to your tax advisor or use the following IRS links to determine the amount of your tax liability at the end of the year. 

• IRS Withholding Estimator
• IRS Publication 505 – Tax Withholding and Estimated Tax

Page updated Sept. 14, 2019.