What is Lookback Period?

Employers deposit federal income tax withheld and Social Security and Medicare taxes on either a monthly or semiweekly schedule. The schedule is determined each calendar year by the employer's tax liability during a lookback period, as described in Publication 15.

For Form 941 filers

The lookback period is the four quarters from July 1 of the second preceding year through June 30 of the preceding year. For example, the lookback period for 2027 runs from July 1, 2025 to June 30, 2026.

• If total tax reported in the lookback period was $50,000 or less, the employer is a monthly depositor
• If it was more than $50,000, the employer is a semiweekly depositor

New employers are generally monthly depositors in their first calendar year, because they had no liability in the lookback period.

Special rules

• $100,000 next-day rule: if accumulated tax reaches $100,000 or more on any day, it must be deposited by the next business day, and a monthly depositor becomes a semiweekly depositor for the rest of the year and the next year
• Small liability: if total liability for a quarter is less than $2,500, the employer can generally pay it with the return
• Form 944 filers use a different lookback period based on the second preceding calendar year

Why it matters

Using the wrong schedule results in failure-to-deposit penalties even if the money was paid. Check your schedule each year. See payroll tax deposits basics and EFTPS.

Related terms

• EFTPS: EFTPS, the Electronic Federal Tax Payment System, is a free Treasury service for making federal tax payments electronically.

Browse more definitions in the small business glossary.