By Ron Rice
See how the new Tax Plan is helping you take home a bigger paycheck.
In December, the U.S. Congress passed a tax cut which will affect all Americans. The highly reported and discussed legislation offers lower income tax percentages to almost all Americans. As a result, the IRS has issued new guidelines for how much employers should be withholding as taxes from workers’ paychecks. The Treasury Department had estimated that 90% of all American workers will pay less in taxes starting this year. Now in January, the IRS has published updated income tax withholding tables to reflect the new law. Employees are not required to make any changes to their Federal W-4. Employers will use the current number of withholding allowances on your W-4, and withhold slightly less tax under the new tax tables. Employers are required to implement the new withholding amounts by February 15, 2018. Pinnacle has already implemented the new amounts, as of late last month. Later this year, the IRS will update its W-4 form. Additionally, the IRS plans to release a new tax withholding calculator on its website by the end of February to help individual taxpayers determine a more accurate amount of withholding. Employees can complete a revised W-4 anytime during the year and submit it to Pinnacle.
How much will I save this year? Although most employees will pay a lower percentage in taxes this year, there is no guarantee you will save any money. It all depends on your household income, personal exemptions, and other tax deductions. One website I found did an analysis of three households and found that the tax savings in 2018 was between 2-4% on each example, as compared to 2017. Another example I found on a website showed the savings was about 5%. So it is likely that your take-home pay just went up! Congrats!