Federal Withholding Change for Tax Year 2018

August 2018

With the recent passing of the Tax Cuts and Jobs Act (TCJA), the Internal Revenue Service (IRS), the Office of the State Comptroller (OSC), and NYC Office of Payroll Administration (OPA) strongly urge all employees to perform a quick “paycheck checkup” to verify that the right amount of tax is being withheld from paychecks.  A significant change was made to the components used to calculate federal tax withholding, including tax rates and brackets, increased standard deduction and elimination of personal exemptions. Employees’ personal tax returns for 2018 may be affected.  Anyone with more complex tax profiles who may be more vulnerable to being under-withheld or over-withheld.

The IRS Withholding Calculator can help you determine the correct amount of withholding.  You will need your personal income tax return for 2017 in order to maximize the benefit provided by the calculator.  The calculator allows you to enter income, deductions, adjustments, credits, and then receive a recommendation on whether you should complete a new Form W-4 (Employee’s Withholding Allowance Certificate).