90% of wage earners in America should start seeing higher paychecks starting in February according to the Treasury Department as the new tax rates take effect.
The IRS released the new tax withholding tables reflected by the tax cut bill that was signed into law in late December.
The time it will take for employees to see the changes in their paychecks will vary depending on how quickly the new tables are implemented by their employers and how often they are paid — generally weekly, biweekly or monthly. The government is encouraging employers to implement the new withholding tables as soon as possible but no later than February 15, 2018, according to a statement from the Treasury Department.
“With this guidance, most American workers will begin to see bigger paychecks. We estimate that 90 percent of wage earners will experience an increase in their take home pay,” said U.S. Treasury Secretary Steven T. Mnuchin. “The Administration’s monumental tax reform legislation continues to provide economic benefits for hard-working Americans. These tax cuts will ensure that American workers are able to keep more of their hard earned income and decide how to spend, invest or save it.”
Playing Politics with the Tax Tables
In conjunction with the release of the new tax tables, two lawmakers have asked the Government Accountability Office to examine whether or not the new tax tables will provide adequate withholding for taxpayers.
Congressman Richard Neal (D-MA) and Senator Ron Wyden (D-OR) sent a letter to the acting IRS Commissioner saying that since the IRS lacks what they described as a “non-political Commissioner,” they were concerned that the Treasury Department may “may unduly influence the new withholding tables for the 2018 tax year in a manner that will result in millions of taxpayers receiving larger after-tax paychecks this election year but ultimately owing federal income tax when they file in 2019.”
Mnuchin called the charge “ridiculous” in a press briefing with reporters on Thursday in defense of the tax tables. He added, “We have people who have worked very carefully on this. Our objective is not to have taxpayers over-withheld, so they owe money at the end of the year.”