It’s 2018, and the tax-overhaul plan signed into law by President Trump on December 22 has officially gone into effect. With Friday approaching, the first paychecks of the year are starting to roll in, but don’t expect to see changes to your paycheck right away. The IRS is still working to develop withholding guidance, and it’s not expected to issue that guidance until sometime this month. Once it does, the IRS is encouraging employers and payroll service providers to implement the new rules by February–so employees should start seeing changes then.
“The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time,” the agency said in a statement.
What happens after that will depend greatly on your income, where you live, and your tax situation: Are you married? Do you have children? Do you itemize? But tax experts warn that the change may not be very noticeable for many income brackets. In an interview with Reuters, Pete Isberg, an executive at ADP, said: “When the taxes are reduced by 1 to 3 percent, that’s not going to be a huge noticeable difference. It’s not going to be hundreds of dollars.”
For instance, a tax cut of $1,000 a year will amount to an extra $38 in each paycheck for a typical employee paid biweekly.
Bottom line for now: Employees are encouraged to “stay put” for the first few weeks of January, Reuters reports—that is, don’t go in and adjust your W-4 withholdings. Wait until the IRS releases its guidance.
In the meantime, there are plenty of paycheck calculators out there that estimate how much of a tax cut you’ll get–if any–after the changes, but they’re only estimates based on hypothetical tax situations. CNN has one here. The Washington Post has one here. The New York Times has one here. Have at ’em!CZ