This is an easy step by step guide to determine whether your character would incur a multiclass penalty and if so how much. Multiclass penalties are on a level to level basis and are not permanent so you need to think about the entire lifespan of the character and apply these steps at each level to guarantee that you aren't incurring a penalty at any point in time. My point is just because you've checked your character is sitting pretty at its final level 20 or 30 situation really doesn't mean squat because you're not going to be gaining anymore xp. Its really important if your plan sets you up to get hit with penalties at one of the later levels. IT IS POSSIBLE TO HAVE PENALTIES FOR JUST A COUPLE LEVELS AND FOR THE AMOUNT OF PENALTY TO CHANGE FROM LEVEL TO LEVEL. If you're done leveling all but one of you're classes and its getting further and further ahead of the others then you don't need to keep checking it. However, if your classes are constantly weaving around the other ones then you probably want to check it more thoroughly.
Initial Note: Once you put an X through a number don't consider it at all for any other steps.
Step I: Write down the number of the level for all of your classes that your character will have. You should not have more than four numbers (you can't multiclass more than 4 classes).
Step II: Put an X through any prestige class number.
Step III: If you are a human or half-elf put an X through the highest number. If there is a tie between two or more numbers just cross out one of them--it doesn't matter which, but only one. (***NOTE: It does not matter if the highest level changes through the life of the character--you always X out the highest level class. i.e. A human 2 rogue, 3 wiz throws out the 3 wiz but the if the same character added two levels of rogue, then he would now throw out the rogue levels because it would be the highest class.)
Step IV: If you are any other race, X out the number of your favored class if you are using it. If you don't know what I am talking about, each race has a favored class that doesn't count toward XP penalty--e.g. fighter for dwarf.
Step V: If you have any repeating numbers, X out all but one of the numbers that is repeating (i.e. 4,4,4,3--I would cross out two of the 4's leaving 4,3). If you have one or no numbers left at this point then skip to Step VIII, you have no tallies/penalty.
Step VI: Choose one of the numbers left that is not X'ed out. Compare that number to only the other numbers left but completely disregard the X'ed numbers. If ANY of the other numbers are two or more levels away from that number (higher or lower) then make ONLY ONE tally mark for that number. It does not matter how many other numbers aren't within 1 level--you only make one tally for that number (e.g. 2,5,6--2 is more than one level from both 5 and 6 but you only give it a single tally). It also doesn't matter if there are numbers that are in between that make a series of 1 level steps--you still get a tally (e.g. 2,3,4--2 is two away from 4 so this would get a tally regardless of the 3).
Step VII: Once you have compared the number you chose to all the remaining numbers, regardless of if you tallied a mark or not for that number, place an X through that number. Move back to Step VI if you have two or more numbers left without X's. If you have only one number left, then move on to Step VIII.
Step VIII: Count your tally (should be 0 to 3) and multiply by 20%. That is the penalty you incur during that level.
So if you had killed a mob that normally gave 100 XP you would only get 80 XP if you have a 20% penalty and 40 XP if you had a 60% penalty. You still need to get to the same amount of XP to get to the next level you just get less XP per mob killed/quest completed.
Example: Dwarf -- 5 rogue, 6 bard, 4 fighter, 5 Shadow Dancer. So I would write down 5, 6, 4, 5. In step II, I would cross out the last 5 because Shadow dancer is a presitge class leaving me with 5, 6, 4. After Step III I would have done nothing because he's not a human or half-elf, but in step IV I would cross out the 4 because fighter is the Dwarves' favored class, leaving me with just 5, 6. In step V I have no repeat numbers left (since I crossed out one of my 5's earlier) and I have two numbers left so I move on to step VI. I choose the 5 and compare it to the 6. Since it is within one level I do NOT make a tally. In step VII I place an X through the 5 leaving me with just the 6 now. Since I have only one number left I move on to step VIII. I don't have any tallys so I don't have any penalty.
If I used the same multiclass with human it would start the same but in step III I would cross out the 6 because humans disregard the highest class they have as their favored class. This leaves me with 5, 4 this time. But in step VI they are still within 1 of each other so still no tally and still no penalty. Same result but due to different favored classes.
Now if we made this a wood elf, it begins the same crossing out the Shadow Dancer 5, but in step II and III we don't cross out anything because he's not a human/half-elf and a wood elf's favored class of ranger isn't in our build. This leaves us with 5, 6, 4. If we pick the 6, it is within one of the 5 but is two more than the 4 so we put a tally. We X out the 6 leaving us with the 5 and 4. We have two more numbers left so we go back to step VI. Now regardless which one we pick will be within one of the other number so we don't have anymore tallys. This leaves us with a tally which is a 20% penalty. If we would have picked the 5 the first time through, it is within one of both the 4 and the 6 so no tally the first time through but then we get the tally the second pass so you can see it works no matter which number you choose.
Even having a favored class is not guaranteed to give you no penalties--in this example above if it were a strongheart halfling which has a favored class of rogue but it will get penalties. I lose a 5 in step II, the other 5 in step III and am left with 6, 4. I compare either one to the other and get more than one away so I got a tally--20% penalty. This is probably the scenario that throws most people--they want to try and chain the one level rule and it doesn't work that way, you have to look at them individually--any class level that is more than one level away from any other non-prestige, non-favored class. But, you don't keep beating a dead horse, once you have found a number that is two away you apply the penalty and don't consider that class level any more. That's why I have the step about removing all but one of a repeating number. It's needed in the following example.
Take a half-elf rogue 5, cleric 5, fighter 5, wizard 3. If we don't have step V and remove the extra 5's we could get an erroneous result if we didn't pick the 3 in the first pass. If we pick the 3 in the first pass, it gets a tally for being two away from the 5's but only one. It's crossed out and regardless of which 5 we choose we get the same results, no more tallies since they are within one of each other. However, if we chose one of the 5's first, then we would get extra tallies each time we picked a 5 before the 3. Essentially we would have unwittingly kept applying the same penalty because 3 is the outlier. If it doesn't make sense, don't worry about it. Trust me, if followed properly, this protocol works.
To give an example of the ultimate 60% penalty take Dwarf 1 wiz, 3 sorcerer, 5 cleric, 7 ranger (don't ask me why you would make such a mess). I don't X out anything in the first few steps because there is no prestige classes, not human/half-elf, and the dwarf's favored class of fighter isn't there. So I move into step VI with all the numbers left 1, 3, 5, 7. I pick any number--5 and compare it to all the other numbers. All of them are more than one away from 5 but I still only put down a single tally. In step VII, I cross out 5 and have two or more numbers left (1, 3, 7). Again in step VI I choose any number--3. It is also more than one away from both the other numbers left but again it just gets a single tally (now I have two tallies total). 3 is crossed off my list and I have two numbers left so I'm back to step VI. Either number is more than one away from the other so I've wracked up another tally. I am left with one number left so I move on to step VIII and I have three tallies--3 * 20% = 60%. This is the worst possible penalty that you can have. This scenario is the lowest possible level that you can have the 60% penalty begin to incur--level 16. Remember it isn't permanent so for example with the 1,3,5,7 Dwarf above if he takes a level in any class but the 7, it will move two of the classes within 1 level of each other so he goes back down to only 40%. Try it for yourself if you don't believe me.