bookkeeping, payroll

Tax Plan Effects on Payroll

Today is the 1st day of 2018. As most of you know, a brand new tax plan was just passed in December. Regardless of the late passing of this bill, many provisions will go into effect today.

You might be wondering how the tax plan will effect payroll. The IRS has yet to release the 2018 tax tables for calculating withholding. This means that your paychecks for at least January will be based off of last year’s tax tables.

When the new tax tables are released, an updated W-4 worksheet will be released as well. Your employer should provide you with this new W-4 to calculate your marriage status and dependents for 2018, your “withholding”. Some of us like to underestimate our dependents, as to overestimate withholding. This gives us a bigger tax refund at the end of the year.

Whatever your withholding method is, most individuals will see a lower tax rate and lower taxable income in 2018. This relates to a bigger paycheck and more money in your pocket.

So keep an eye out for that new W-4 and look forward to the “raise” you’re about to receive!

 

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.