IRS Unveils New Income Tax Withholding Guidelines

Saul Bowman
January 14, 2018

The Treasury Department on Thursday released the withholding tables for the new tax law. Employers will have until February 15 to incorporate the changes in their payroll systems.

"This new guidance will mean that workers and their families will receive larger paychecks starting in February", said Treasury Secretary Steven Mnuchin.

"While these withholding tables are created to work with Forms W-4 that employees have already provided to employers, it is possible that taxpayers may need to make changes to their Forms W-4", Jennifer Breen, a partner in Morgan, Lewis & Bockius LLP's Washington office, said in an email.

The IRS also said it was not yet ready to issue a new W-4 form.

Administration officials insisted that the guidelines would withhold the correct amount of tax from wages but acknowledged that they are geared to out-of-date W-4 individual withholding forms. The revisions are also aimed at avoiding over- and under-withholding of tax as much as possible.

So now is a good time to take a second look at your tax withholding at work.

"I want to be sure consumers trading this understand the risks", Mnuchin said.

That's not bad advice for any year when there are big tax changes but it's especially critical this year.

For people with simpler tax situations, the new tables are created to produce the correct amount of tax withholding. "The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding".

"Republicans are using brute force and speed to implement a law that will deliver a financial blow to hardworking Americans all across the country", Sen. "With the child tax credit, like, 'Is it true that will increase?' Yes, it increases, but not with the 2017 tax year, for the 2018 tax year", said Curtis. Ron Wyden, the top Democrat on the Senate Finance Committee, said in a statement.

Treasury Secretary Steven Mnuchin at the White House press briefing on Thursday dismissed suspicions that administration is "juicing" the tables as a "ridiculous charge".

Based on the new tables, some employees could be in danger of tax underwithholding if they claim a significant number of withholding allowances, O'Toole told Bloomberg Tax.

The GAO has said Wyden's request must go through its usual review process before a decision to proceed is made.

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