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3/19/2020

New Withholding Guidelines Under The Tax Cuts and Jobs Act Will Increase Take Home Pay | U.S. Department of the Treasury

New Withholding Guidelines Under The Tax Cuts and Jobs Act
Will Increase Take Home Pay
January 11, 2018

Guidance is the first step for workers to see withholding changes from new law.
Future actions will include a new IRS withholding calculator and a new W-4 Form.
Washington – Today, employers received new withholding guidance from Treasury and the
Internal Revenue Service (IRS) in order to implement tax cuts and other provisions of the Tax
Cuts and Jobs Act. Employers are encouraged to implement the new withholding tables
expeditiously but should do so no later than February 15, 2018. Workers 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 percent of wage earners will experience an increase in their take home pay," said U.S.
Treasury Secretary Steven T. Mnuchin. "The Administration's monumental tax reform legislation
continues to provide economic benefits for hard-working Americans. These tax cuts will ensure
that American workers are able to keep more of their hard earned income and decide how to
spend, invest or save it."
The new guidance, developed jointly by Treasury's O ice of Tax Policy and the IRS, was
constructed to work within the constraints of the existing payroll withholding system in order to
deliver the benefits of the tax cuts as soon as possible, to as many Americans as possible, and
with as little disruption as possible. Specifically, the withholding tables released today are
designed to work with the Forms W-4 that workers have already filed with their employers. This
will minimize burden on taxpayers and employers.
The new law makes a number of changes for 2018 that a ect individual taxpayers. The new
withholding tables reflect the increase in the standard deduction, repeal of personal
exemptions and changes in tax rates and brackets.
As the IRS makes clear in their release, the new tables are designed to produce the correct
amount of tax withholding. The tables are also aimed at avoiding over- and under-withholding
of tax as much as possible.
https://home.treasury.gov/news/press-releases/sm0249

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3/19/2020

New Withholding Guidelines Under The Tax Cuts and Jobs Act Will Increase Take Home Pay | U.S. Department of the Treasury

To help individuals identify the correct amount of withholding, the IRS will be releasing a new
withholding calculator by the end of February which will be posted on IRS.gov. Treasury and the
IRS encourage employees to use the calculator once it is released to update their withholding
information as appropriate.
Additionally, Treasury and the IRS will engage in a thorough and collaborative process to release
a new W-4 for 2019 by the end of the year. The process will include seeking input from
employers and payroll providers on how best to design a new W-4 to reflect an updated tax
system based on the new law.

https://home.treasury.gov/news/press-releases/sm0249

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