The Internal Revenue Service released Notice 1036 on January 11, 2018. The notice updated the income-tax withholding tables for 2018 which reflects changes made by the tax reform legislation enacted last month. This is a first in a series of steps that the IRS will take to help improve the accuracy of withholding following major changes made by the new tax law.
Employers should begin using the 2018 withholding tables as soon as possible, but not later than February 15, 2018. The tables are designed to work with the existing W4s your employees have already filled out. The marital status chosen on the W4 will determine how much income tax will be withheld. Personal exemptions are no longer relevant. The IRS is working on a new W4 form which is scheduled to be released near the end of February. We will send out a notice when they are available.
Many employees will notice a change in their take home pay. Once the IRS releases the new W4, we encourage all employees to review their personal tax situation to see if they need to make any changes.
The IRS has posted a list of frequently asked questions to help explain the new withholding tables. Those FAQs can be accessed by clicking here.