The U.S. Treasury estimates that 90 percent of U.S. workers will get more take-home pay as soon as next month based on changes made by the new tax law.
New guidance and withholding tables for employers were released by the U.S. Treasury and IRS on Thursday, according to CNN.
Thanks to these tables and the new tax law, more people will receive a higher paycheck. Employers have until Feb. 15 to incorporate the changes into their payroll.
The new tables are designed to help approximate the change in workers’ tax liability in a way that “delivers benefits as soon as possible to as many people as possible with as little disruption as possilble” a senior Treasury official said.
CNN advises taxpayers to assess whether the tables are withholding enough money so they don’t have a big bill when they file taxes next year.
Individuals could be affected by new tax brackets, lower income taxes, a near-doubling of the standard deduction and the removal of personal exemptions and deductions.
The IRS will not be issuing new Form W-4s this year, but hope to have new ones by 2019.
“We’ve constructed the tables so that most people should be accurately withheld if they leave their W-4 in place,” a senior IRS official said, according to CNN.
New W-4s are needed because personal exemptions, which are a central element of the current withholding system, have been removed.
“It’s necessary to build a new approach to withholding, which will take some time,” the senior IRS official added.
He advised taxpayers to review the number of allowances they currently take on their W4 on the IRS’ new withholding calculator that will be released in February.
The calculator was made to determine whether a taxpayer is eligible for different tax breaks.
“We would encourage every taxpayer to run their information through the calculator. Then they can decide what they want to do,” the senior IRS official said.
Republican proponents of the new tax structure have long argued that its popularity will come in part from taxpayers noticing less money coming out of their paychecks each month.
As CNBC reported, House Speaker Paul Ryan criticized pundits “telling mistruths, disguising the facts of this thing” in an effort to unfairly malign the tax plan’s impact.
“But when we get this done, when people see their withholding improving, when they see the jobs occurring, when they see a simpler tax code, that’s what’s going to produce the results,” he said. “And results are going to be what makes this popular.”
Truth and Accuracy
We are committed to truth and accuracy in all of our journalism. Read our editorial standards.