IRS Sets New Withholding Tables as GOP Pledges Paycheck Boosts

• January 11 2018
• Alexis Leondis

The Internal Revenue Service released guidance for employers about how much tax they should withhold from employees’ paychecks in 2018.

The Internal Revenue Service released guidance for employers about how much tax they should withhold from employees’ paychecks in 2018.

Companies have been awaiting details from the IRS, following the sweeping tax overhaul passed at the end of last month that changes tax rates and brackets, increases the standard deduction and repeals personal exemptions. Employers should begin using the new withholding tables as soon as possible, but not later than Feb. 15, according to the IRS notice issued Thursday.

“This is outstanding for families in Texas and taxpayers across the country,” House Ways and Means Chairman Kevin Brady, a Texas Republican, said in a statement. Nine out of 10 taxpayers “will see a boost in their take-home pay within the coming weeks,” he said.

Republicans have promised that American wage earners will see bumps in their paychecks starting in February -- after employers have made the withholding adjustments. House Majority Leader Kevin McCarthy of California has said taxpayers should “check their check.”

Two congressional Democrats have expressed concern that the new tables would “systematically underwithhold income taxes during the 2018 tax year.” That sort of move would boost workers’ pay before the November 2018 congressional elections but could leave them “owing federal income tax when they file in 2019,” according to a Jan. 8 letter to the Treasury Department from Senator Ron Wyden of Oregon and Representative Richard Neal of Massachusetts.