What is the federal income tax withholding rate for non-wage payments for individuals without a TIN?

The federal income tax withholding rate for non-wage payments, such as interest, dividends, and certain other types of income, when the individual does not provide a Taxpayer Identification Number (TIN), is indeed 28%. This withholding rate is applied to promote compliance with tax regulations, ensuring that the IRS can collect taxes owed even if the individual has not provided proper identification.

The requirement for withholding at this rate serves as a deterrent against taxpayers failing to report income or not filing tax returns. The higher, flat rate reflects the government's approach to minimize the risk of tax avoidance in cases where the individual's tax compliance status is uncertain.

In contrast, the other rates listed are not applicable in this scenario. The 31% rate pertains to certain backup withholding situations under specific regulations and may not apply universally across all non-wage payments. The 20% and 25% rates are generally applicable to different categories of income or situations. Therefore, 28% is the standard rate established by the IRS for this particular case involving individuals without a TIN.