2019 Withholding Tables & Updates– The Latest IRS Guidance

Editor’s Note: Ever wonder if tax withholding guidelines change from year to year? You’ve come to the right place. Here you’ll find guidance on 2019 withholding tables, including 2019 tax withholding changes, 2018 federal tax withholding tables, and other withholding changes information.

Tax Reform and IRS Withholding

Withholding tables change every year to account for inflation. But even more changes needed to be made to reflect changes made by the Tax Cuts and Jobs Act (TCJA). IRS news release IR-2018-5 announced updates to income tax withholding for 2018. Employers were encouraged to implement the changes as soon as possible, but no later than February 15, 2018.

Among many changes made by the TCJA to individual taxes, new tax rates and brackets, increased standard deductions, and the elimination of personal exemptions had a direct impact on payroll withholding for 2018.

According to IRS’s guidance, employees were not required to complete a new Form W-4, Employee Withholding Allowance Certificate because of the tax reform changes. The updated withholding tables were designed to use the number of allowances on previously completed Forms W-4 to arrive at the correct amount of withholding for the rest of 2018.

However, tax reform changes created a good opportunity for employees to review existing allowances claimed on Forms W-4 and make updates as necessary to ensure withholding is accurate going forward. For example:

• Taxpayers who previously itemized deductions but now expect to claim the standard deduction may want to update their W-4.
• Taxpayers who were previously phased out of the child tax credit and now expect to be able to claim it may want to update their W-4.

The IRS is revising Form W-4 and releasing updated withholding tables 2020. Similar to advice the IRS gave following the tax reform changes, employees are not required to complete a new W-4 form if they already have one on file with their employer. However, anyone who switches jobs or needs to change their withholding should complete the new version of the W-4 in 2020.

2019 Federal Tax Withholding Tables

View the 2019 federal withholding tables.

2018 Federal Tax Withholding Tables

For context, here are the 2018 withholding tables. Use the 2018 tax withholding tables as a reference to this years’ 2019 tax withholding tables.

2019 Tax Withholding Tables & How Withholding Works

Now that you have read through the 2018 and 2019 tax withholding tables, let’s summarize how withholding works in 2018 and 2019.

First, discussions about paycheck withholding and Form W-4 often use “allowance” and “exemption” interchangeably, but the terms do not quite mean the same thing.

• Each allowance is an amount subtracted from an employee’s pay when the employer determines how much to withhold.
• A tax formula is then applied to the remainder to calculate federal income tax withholding for that employee.
• Thus, more allowances result in more subtracted from the employee’s pay to determine withholding and a smaller taxable remainder. Conversely, fewer allowances result in less subtracted from the employee’s pay and a larger taxable remainder.
• Both the allowance amount and the formula vary based on pay frequency (weekly, semi-monthly, etc.) and whether the employee uses the single or married withholding rate.

Form W-4 for 2018 does not ask the employee about how many exemptions he or she intends to claim. Rather, it asks questions about the employee’s spouse and dependents, filing status, itemized deductions, and tax credits to arrive at a number of allowances.

Ultimately, the appropriate number of allowances and resulting tax withheld are meant to get the employee as close as possible to breaking even, given the tax law in place each year.

Example federal withholding: Steve is single, has no dependents, and earns $50,400. His W-4, completed according to form instructions, has 2 withholding allowances. He is paid on a semi-monthly basis.

2019 federal withholding: Based on the Steve’s income, the 2019 tax rates, higher standard deduction, and no exemptions, Steve’s tax liability for 2019 will be $4,393. Steve’s employer will use the 2019 withholding table for the entire year. Total withholding for 2019 will be $4,390.

It is rare that an employee would wind up having withholding and a tax liability that match exactly. In this very simple scenario, the employee is pretty close. As in prior years, he would have the option of decreasing or increasing the number of allowances, resulting in more or less withholding. Or, he might be able to request his employer to withhold a small additional amount to make sure his withholding covers his tax liability.

Even though providing a new W-4 form to a current employer is not required right now, in addition to the reasons mentioned above, employees may want to revise their W-4 if they have personal changes (marriage, divorce, new baby, etc.), start a second job, receive other types of income such as dividends and capital gain, and so on.

Where to Go For More Insight on 2019 Federal Withholding Tables:

Use our W-4 withholding / paycheck tax calculator to determine withholdings this year.

If you are a small business employer seeking hands-on guidance, look no further. H&R Block offers small business taxes and accounting services to help your business grow and thrive. Schedule a consultation with one of our experts today.

2020 Withholding Tables

The IRS is revising Form W-4 and releasing updated withholding tables 2020. One major change is that the 2020 version of Form W-4 will not have allowances. Employers can continue to use the information employees previously provided on a prior version of the Form W-4 to calculate withholdings. New employees will not use the allowance system for 2020 withholding.

Note: Notice 1036 contains revised percentage method withholding tables updated for the TCJA. Using the tables requires a two-step process and explained earlier: determining the allowance amount to subtract from employees’ pay and then applying the tax formula to determine withholding. Pub. 15, Circular E, Employer’s Tax Guide was revised to include updated wage bracket tables which simplify and streamline the process.