The IRS will release a new withholding calculator tool during the week of February 19 so that employees can double-check their withholding. Treasury Secretary Steven Mnuchin made the announcement as he testified before the House Ways and Means Committee on President Trump’s fiscal year (FY) 2019 budget on February 15. He testified before the Senate Finance Committee on February 14.
New Withholding Calculator
The new withholding calculator will allow employees to verify the proper amount of federal tax to be withheld from their paychecks under the new tax law, according to Mnuchin. In January, the IRS released updated 2018 withholding tables, which the IRS expects to increase most employee paychecks.
The new tables reflect the increased standard deduction, repeal of personal exemptions and changes in tax rates and brackets. The revised calculator will reflect the increased standard deduction, repeal of personal exemptions and changes in tax rates and brackets. However, it will also include the changes to itemized deductions, increase in the child tax credit, the new dependent credit and repeal of the dependent exemption.
During the hearing, Democratic lawmakers continued to criticize the Tax Cuts and Jobs Act (P.L. 115-97) for primarily benefiting the wealthy. “President Trump and the Republicans rammed through a $2.3-trillion tax cut for the wealthy and corporate America. While Republicans claim that their bill will benefit average Americans, the evidence is clear—83% of the benefit will go directly to those at the very top,” Ways and Means ranking member Richard Neal, D-Mass., said.
According to Chairman Kevin Brady, R-Tex., however, over 3-million Americans have already seen raises, bonuses and increased benefits because of the new tax law, and 90 percent of taxpayers will see their take-home pay increase based on new withholding requirements. Earlier in the day on February 15, Brady spoke at a Tax Council Policy Institute (TCPI) event in Washington, D.C., touting the Tax Cuts and Jobs Act.
At the event, Brady also discussed tax extenders. The extenders are a package of expired tax breaks renewed for the 2017 tax year by the Bipartisan Budget Act of 2018 (P.L. 115-123). Previously, a Ways and Means spokesperson told Wolters Kluwer the committee will be assessing whether such tax extenders have a place in the tax code moving forward.
“Now we have a new tax code that demands a new, forward-looking approach on tax extenders. And starting now, we will apply a rigorous test to these temporary tax provisions,” as noted in Brady’s prepared remarks given to Wolters Kluwer. Those that do not meet certain standards will be eliminated, he added. The Ways and Means Tax Policy Subcommittee will soon hold a hearing specifically focused on tax extenders, according to Brady
By Jessica Jeane, Wolters Kluwer News Staff
Ways and Means Press Release: Brady Opening Statement at Hearing on Department of Treasury’s Fiscal Year 2019 Budget Request
Ways and Means Press Release: Neal Opening Statement at Hearing on the Department of the Treasury’s FY 2019 Budget Request