Today the Internal Revenue Service has released Notice 1036 updating the income-tax withholding tables as a result of the tax reform legislation enacted in December. This will be the first in several updated they will improve the accuracy of 2018 withholdings. Here is what your small business needs to know about the new IRS 2018 withholding tables and guidelines.
The IRS Releases New 2018 Withholding Table
Implementation of 2018 Withholding Table
You should be using the new 2018 withholding tables as soon as possible but no later than February 15th. However, before you implement the 2018 withholding tables continue to use the 2017 guidelines.
Future Form W-4 Revisions
Later on this year the IRS plans to revise Form W-4 because this form is ultimately used to determine how much of their paycheck is withheld toward income taxes. Notice 1036 should help to minimize the burden on taxpayer and employers. At this time employees are not required to do anything.
2017 Vs. 2018 Withholding Table
The new law passed last month made several changes to the established tax plan including an increase in standard deductions, the repeal of personal exemptions, and updates in tax rates and brackets.
The new 2018 withholding tables should result in the correct amount of tax withholdings. Ideal this will mean not too much or too little. The IRS will be revising the withholding tax calculator on their website by the end of February. So your employees can understand their new withholdings.
2018 Withholding Table Details
Employee portion of Social Security: 6.2% with a taxable wage of $128,400
Employee portion of Medicare: 1.45% with no wage base limit
Medicare Surtax: .9% which exceeds $200,000 or $250,000 for married taxpayers
Guaranteed Tax Compliance
Share this post and comment below with any question for our expert payroll specialists. As always, we at PayWow take pride in providing you with a safe, secure, and accurate payroll processing and e-filing that saves you time and money.