Tax withholding is the process where an employer deducts a portion of an employee's earnings to pay federal, state, and local taxes on their behalf. This ensures that individuals contribute to their tax obligations throughout the year, rather than paying a lump sum at tax time. The amount withheld depends on various factors, including the employee's income level and the information provided on their W-4 form. Employees can adjust their withholding by submitting a new W-4 form to their employer, which allows them to claim allowances or specify additional amounts to be withheld. Proper withholding helps prevent underpayment penalties and can lead to a tax refund if too much is withheld during the year.