About 90 percent of all workers will see an increase in their take-home pay under new guidelines and withholding tables by the U.S. Treasury and the IRS, according to CNN. The updated tables were prompted by the new tax law.
Workers could notice the increase in their paychecks as early as February. Employers were given a Feb. 15 deadline to incorporate the changes into their payroll systems. The fast rollout of the changes is designed to offer new tax law benefits to as many people as possible while also limiting disruptions to the payroll process, according to published reports.
Major changes in the tax tables include “new tax brackets, (mostly) lower income tax rates, a near-doubling of the standard deduction, and the elimination of both personal exemptions as well as many itemized deductions,” CNN reported.
Is this entirely good news?
The good news comes with a caveat. Many taxpayers will need to ensure that enough money is being withheld from their paychecks. If not, they could face a hefty tax bill in 2019.
Democrats are criticizing the plan, saying it could lead to people owing money when they file their tax returns.
“Republicans are using brute force and speed to implement a law that will deliver a financial blow to hardworking Americans all across the country,” Sen. Ron Wyden (Ore.), the top Democrat on the Senate Finance Committee, said in a statement.
Wyden and Rep. Richard Neal (D-Mass.), who serves on the House tax-writing committee, asked the Government Accountability Office to review the new IRS tables to see if they will result in not enough federal taxes being withheld from paychecks.
“I look forward to GAO’s independent review of these tables, which will expose whether the Trump administration is tampering with Americans’ paychecks, resulting in a whopping tax bill next year,” Wyden said.
Wyden’s request will go through a typical review process before it can proceed.
Suspicions that the administration is manipulating the tables is a “ridiculous charge,” Treasury Secretary Steven Mnuchin said at a White House briefing Thursday.
Most people receive tax refunds, and that trend is expected to continue, officials said in published reports.
How can you tell if enough money is being withheld?
The IRS is issuing a new online withholding calculator by the end of February. The calculator will allow taxpayers to anonymously enter information such as income and dependents to determine if they are eligible for various tax breaks.
New W-4 forms are expected to be issued until 2019, according to reports.