WASHINGTON – Taking the first concrete step toward the Republican tax plan’s promise of fatter paychecks for millions, the Trump administration on Thursday issued new guidelines for how much employers should withhold as taxes from workers’ pay.
The Internal Revenue Service published the new income-tax withholding tables to conform to the sweeping, $1.5 trillion tax overhaul, the first major rewrite of the tax code in three decades, which became law last month and took effect Jan 1. The new law provides steep tax cuts for corporations and wealthy Americans while offering more modest reductions for most low- and middle-income families and individuals.
Businesses across the country must adopt the changes by Feb. 15. That means employees could start seeing the changes reflected in their paychecks next month, the IRS said. President Donald Trump and the Republican architects of the tax plan have deflected criticism of the unpopular legislation, insisting at every turn that Americans will come to love the new law when they see their heftier paychecks next month – with less money withheld in anticipation of lower income taxes.
Trump and the Republicans are counting on the tax-cut law, the first significant legislative achievement of his presidency, to ensure the GOP retains its majorities in Congress in this year’s elections.
The new guidelines adjust how much income tax must be taken out from employee paychecks after taking into account exemptions claimed by employees on their IRS Form W-4, filed with their employers to help determine withholding.