Updated 2018 Withholding Tables Available

The IRS released Notice 1036 on January 11th, updating the income tax withholding tables for 2018 to reflect changes made by the recent tax law passage.

In the recent news release, the IRS states:

Employers should begin using the 2018 withholding tables as soon as possible, but not later than Feb. 15, 2018. They should continue to use the 2017 withholding tables until implementing the 2018 withholding tables.

The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This will minimize burden on taxpayers and employers. Employees do not have to do anything at this time.

The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.

To help people determine their withholding, the IRS is revising the withholding tax calculator on IRS.gov. The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.

The IRS is also working on revising the Form W-4. The calculator and new Form W-4 can be used by employees who wish to update their withholding in response to the new law or changes in their personal circumstances in 2018, and by workers starting a new job. Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.

For the full news release: Updated 2018 Withholding Tables Now Available; Taxpayers Could See Paycheck Changes by February | Internal Revenue Service

2 thoughts on “Updated 2018 Withholding Tables Available”

    1. Correct — the new withholding tables address the fact that income tax brackets have changed due to the new legislation; however, there is no change to payroll tax (i.e., Social Security & Medicare). Since the employer matching portion is only for payroll taxes, the new legislation has no effect on it. Furthermore, ADP (or any third-party company, really), will take care of updating the withholding tables, payroll tax limits, state income tax changes, etc… without any input from employers at all. One of the many reasons I recommend third-party payroll instead of doing it in-house!

      One note: the state unemployment agency issues new rates to each employer in late December. You should have received a notice from them that you’ll want to forward to your payroll processor if you haven’t yet. That’s the only payroll responsibility that you might have overlooked due to its not being automated by ADP (since it’s different for each employer).

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