The IRS has released new tax withholding tables to businesses to reflect the changes effective for the 2018 tax year passed in the GOP tax reform bill. The Treasury Department has issued notice that businesses should begin using the new withholding tables as soon as possible, but no later than February 15, 2018.
Bigger Paychecks Are Coming
Employees should notice an increase in their paychecks by February 15th, but the IRS insists that employees do not have to do anything at this time. For those with relatively simple tax situations, the new tables are designed to produce the correct amount of withholding, and compensate for the altered tax brackets, the increase in the standard deduction, and the repeal of personal exemptions.
New W-4 Forms Are Not Yet Ready
Because of the time crunch between the signing of the bill and the new year, new W-4 withholding forms and worksheets are not yet available. Unless you have had a life event in 2017, employees should keep their old W-4 on file. If you need to make a change to your W-4 withholding because of a life event, taxpayers should use the old 2017 W-4 form for now and update again when the new form is released.
The IRS is working on revising the tax withholding calculator on IRS.gov. They anticipate it should be available by the end of February. All taxpayers are encouraged to revise their withholdings when the calculator is ready, as the new withholding tables are not able to compensate for changes to available itemized deductions, the increase of the child tax credit, the repeal of dependent exemptions, and the new dependent credit.