The IRS announced last week that they have created and released the new Federal Withholding Tax Tables related to the Tax Cuts and Jobs Act tax reform bill. These changes have been updated to the payroll system, so all payrolls processed beginning January 22 ^nd will see the impact of the new tax calculations in their employees' paychecks.

 

Based on testing being conducted on the new tax tables by Payroll Network, most employees will likely see a decrease in the amount of federal taxes withheld. In many cases, this tax decrease will be more significant than in any previous year's tax update. 

While the IRS has indicated that employees can use the current Form W-4, t he agency said it will be revising Form W-4 along with the online employee withholding calculator to reflect the new tax law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit, and the repeal of dependent exemptions. 

 

Because of the numerous changes included in this new law, we encourage ALL employees to review their current Form W-4 in place. In particular, employees that claim a large number of withholding allowances should pay particular attention to their tax withholding changes and the impact on their overall withholding requirements for tax year 2018.

 

One final note to pass along: because many states base their tax structure on the federal income tax guidelines, it is very possible that some states will be developing new withholding guidelines of their own for 2018. As any of these changes become available, Payroll Network will pass these along to you as soon as possible.