The Internal Revenue Service released Thursday the updated 2018 withholding tables reflecting enactment of the new tax law, the Tax Cuts and Jobs Act.
House Ways and Means Chairman Kevin Brady, R-Texas, and Treasury Secretary Steve Mnuchin stated that nine out of 10 taxpayers will see a boost in their take-home pay within the coming weeks.
“That comes on top of all the bonuses, wage increases and expanded benefits that so many businesses have already provided American workers as a result of tax reform,” Brady said.
Mnuchin encouraged employers to implement the new income tax withholding tables “expeditiously,” doing so no later than Feb. 15.
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Workers, he said, will see changes in their February paychecks once employers adopt the new guidance.
“With this guidance, most American workers will begin to see bigger paychecks. We estimate that 90% of wage earners will experience an increase in their take-home pay,” Mnuchin said.
The withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers, Treasury states, which “will minimize burden on taxpayers and employers.”
The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets under the new tax law.
For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding, the IRS said. “The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.”
IRS Updating Withholding Tax Calculator
The IRS is also revising the withholding tax calculator on IRS.gov to help individuals determine their withholdings. The updated calulator should be up by the end of February,
Taxpayers, the IRS said, “are encouraged to use the calculator to adjust their withholding once it is released.”