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IRS Publishes 2018 Withholding Tables

Earlier today the IRS issued new withholding tables for 2018, along with an explanatory news release and a frequently asked questions document. The new tables reflect changes made by the tax reform legislation enacted last month. Employers should begin using the new tables as soon as possible, but not later than February 15.

The new tables are designed to work with existing Forms W-4, but the IRS intends to revise Form W-4 to reflect the legislative changes, including the increase in the standard deduction and the elimination of personal exemptions. Some employees, particularly employees who itemize deductions, may need to elect additional withholding to avoid being under-withheld under the new tables.

The guidance also clarifies that the new withholding rates for supplemental wages are 22% (for supplemental wages below $1 million) and 37% (for supplemental wages in excess of $1 million).

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About this Author

Mary Hevener, tax lawyer, Morgan Lewis
Partner

Mary B. “Handy” Hevener helps US and multinational enterprises minimize corporate payroll taxes and maximize benefits–related tax deductions. She focuses her practice on the tax treatment of employee and independent contractor benefits outside qualified retirement plans, including stock options and other stock-based compensation; executive income deferrals; golden parachutes; and fringe benefits that range from health and life insurance, to employee loans, cars, planes, and prizes.

202.739.5982
William Zimmerman, Morgan Lewis, Tax lawyer
Partner

William P. Zimmerman guides clients on the creation and operation of private and pooled investment vehicles, such as mutual funds, hedge funds, real estate investment trusts, and other investment-related vehicles. He also advises clients on general corporate and individual tax planning matters, including reorganizations, mergers, acquisitions, spinoffs, recapitalizations, and workouts. Additionally, Bill provides partnerships and limited liability companies with planning and operational guidance on tax-related issues.

Bill is the most recent past chair of the investment management committee of the tax section of the American Bar Association. He is a frequent speaker on tax-related topics, and also annually presents at Morgan Lewis’s Private Fund Investor Roundtable. In addition, Bill is a fellow of the American College of Tax Counsel.

215-963-5023