Employers should make adjustments by Feb. 15; workers need not resubmit Form W-4
The Internal Revenue Service on Jan. 11 released Notice 1036, which contains updated income-tax withholding tables for 2018 that reflect changes made by the tax reform law enacted at the end of December. The IRS also posted a set of Withholding Tables Frequently Asked Questions.
Employers should begin using the 2018 withholding tables as soon as possible but not later than Feb. 15, 2018, the IRS said. HR compensation and payroll managers should work with their internal payroll departments and payroll vendors to ensure that their systems are appropriately adjusted in light of the IRS guidance. Employers should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.
The updated withholding information shows the new rates for employers to use during 2018 and reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and income brackets. For employees with simpler tax situations, the new tables are designed to produce the correct amount of tax withholding, avoiding over- and under-withholding of tax as much as possible.
Ninety percent of wage earners will see increases in their paychecks under the new withholding rates, the Trump administration has said. 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—weekly, biweekly or monthly—the IRS noted.