The IRS recently released updates to the income-tax withholding tables for 2018. This change updates the 2018 tax tables in accordance with the tax reform legislation enacted at the end of the year (HR1). Employers should update their tables as soon as possible, but at least by February 15th.

The IRS states that the new law “makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.” The IRS is also working on revising the withholding tax calculator on their website to assist individuals in determining their withholding on the form W-4.

As a result of the table change, employees should generally see an increase in their take home pay. We have already seen increases to take home pay ranging from 1.5% to 2.5%. As a reminder, now might be a good time to increase your contribution to your 401k retirement plan. Adding an additional 1% to your retirement plan will likely result in a slight increase to your take home pay and an increase to your retirement account, resulting in a “win-win” scenario.

Additional information regarding the updated withholding tables can be found here: https://www.irs.gov/newsroom/updated-2018-withholding-tables-now-available-taxpayers-could-see-paycheck-changes-by-february