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Updated 2018 Withholding Tables Are Now Available

From the IRS---

The Internal Revenue Service released Notice 1036, which updates the income-tax withholding tables for 2018 reflecting changes made by the tax reform legislation enacted last month. The IRS states that this is the first in a series of steps that it will take to help improve the accuracy of withholding following major changes made by the new tax law. The updated withholding information, posted today on IRS.gov, shows the new rates for employers to use during 2018. Many employees will begin to see increases in their paychecks to reflect the new law in February. The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid — generally weekly, biweekly or monthly.

The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time. The new law makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets. For people with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.

The IRS is also working on revising the Form W-4, which will reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and repeal of dependent exemptions. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 W-4.

For 2019, the IRS anticipates making further changes involving withholding. We will share information about that as it becomes available.

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