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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).

Copyright © 2018 by Morgan, Lewis & Bockius LLP. All Rights Reserved.


About this Author

Mary Hevener, tax lawyer, Morgan Lewis

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.

William P. Zimmerman, Morgan Lewis Law firm, Tax Practice Attorney

William P. Zimmerman is a partner in Morgan Lewis's Tax Practice. Mr. Zimmerman’s practice focuses on the creation and operation of private and pooled investment vehicles, including mutual funds, hedge funds and other investment-related vehicles. He also has a significant background in advising clients on general corporate and individual tax planning matters, including reorganizations, mergers, acquisitions, spin-offs, recapitalizations and workouts.