Last week, the IRS released Notice 1036, Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding, that indicates changes made since the new tax law, The Tax Cuts and Jobs Act (TCJA), was enacted in late December.

This major legislation had an effective date of January 1, 2018, for most provisions. However, because of the tight timeline of the passage of the legislation, it has taken the IRS several weeks to update their withholding tables for 2018.

According to the IRS, this is the first of several actions the agency will take to help improve the accuracy of withholdings since the new law’s significant changes. The IRS expects to make more withholding changes in 2019. The agency says it will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding. So stay tuned.

For now, taxpayers should begin seeing paycheck withholding changes no later than February 15^th. The new tables indicate the increase in the standard deduction, repeal of personal exemptions, and changes in tax rates and brackets. According to the IRS, the new tables are prepared so as to avoid over or under-withholding, but taxpayers with more complex situations still face possible under-withholding of taxes. The IRS advises that people who itemize their deductions, couples with multiple jobs, and people with more than one job in a year should review their tax situations.

The bottom line is, as a gross generalization, that wage earners should expect to see an increase in their tax home pay (because of a reduction in tax withholding) take effect within the next one or two paychecks.