The Internal Revenue Service (IRS) recently updated income tax withholding tables for 2018 that reflects changes made by tax reform legislation. With the new tax law comes the suspension of the personal exemption deduction (through 2025).

Notice 1036 includes the new rates for employers to use no later than Feb. 15, 2018. Employers are permitted to use 2017 withholding tables until the new ones are implemented.

PrimePay clients: We’ve taken care of this for you; our systems have since been updated with the release. Please note, these changes are not retroactive.

What is a withholding table?

A withholding table shows payroll providers (like us) and employers (like you) how much to withhold from an employee’s paycheck, given each employee’s wages, marital status, and the number of withholding allowances they claim.

What has been updated?

The new tables work with Forms W-4 that employees file with employers to claim withholding allowances.  Generally, the new tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets.

To see the change to withholding allowance amounts by payroll period, click here to see the notice from the IRS.

How will paychecks be different?

Starting in February, employees will begin to see withholding changes. This will be dependent on your pay frequency.

Are Forms W-4 changes needed?

Not at this time. The new tables were designed to limit the amount of administrative burden on taxpayers. Currently filed Forms W-4 will currently work.

The IRS will most likely release a revised Form W-4 for the 2019 tax year. Employees may be required to submit a revised Form W-4 if they’ve claimed additional allowances for the personal exemption deduction. Employers should be prepared to process the updates.

How do we know withholding is correct?

Starting in February, once you’ve noticed the change to your withholding, we recommend using a calculator to double check it. You may not notice a change until mid-February, depending on your payroll frequency. Head to this page from the IRS or click here to get to our calculator page.The updated calculators will be available in February.

Will there be more changes?

We can expect more updates to come in 2019, according to the IRS. Our PrimePay team is closely following all news that is released. As soon as more information becomes available, we will be sure to let you know.

Questions? Please contact us at (877) 44-MYPAY

If you'd like to download a copy of a PDF with all of the information, please click here.