Treasury and IRS release new guidance on tax withholding

The IRS and Treasury Department on Thursday issued new guidance on tax withholding from employees' paychecks, a key step in its implementation of the new tax law that President TrumpDonald John TrumpLondon terror suspect’s children told authorities he complained about Trump: inquiry The Memo: Tide turns on Kavanaugh Trump to nominate retiring lawmaker as head of trade agency MORE signed last month.

The new guidance will allow many taxpayers to start seeing bigger paychecks due to the new law. The IRS is instructing employers to implement the new withholding tables by Feb. 15.

"We estimate that 90 percent of wage earners will experience an increase in their take-home pay," Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump announces tariffs on 0B in Chinese goods Trump: China tariff announcement to come Monday afternoon Trump could hit China with tariffs of 0 billion as soon as Monday MORE said in a news release. 

The new withholding guidance takes into account a number of changes made by the new law, including the larger standard deduction, the elimination of personal exemptions and the new tax rates.

The guidance will work with the existing W-4 forms that employees have filled out. Mnuchin said the White House press briefing that Treasury and the IRS will release new W-4 forms for 2019 later in the year.

The IRS also plans to update the withholding calculator on its website by the end of February, so that taxpayers can see if they want to update their withholding.

"These new tables will help deliver the tax cuts as soon as possible to as many Americans as possible with as little disruption as possible," Mnuchin said.

Top Democratic tax-writers have expressed concerns that Treasury may have applied pressure on the IRS to underwithhold from paychecks so that taxpayers would see a bigger boost to their paychecks during this election year. Underwithholding would lead to taxpayers owing more when they file their 2018 returns next year.

Mnuchin pushed back against those concerns, calling it "another ridiculous charge.” He said the guidance is designed so that there's no material change in the number of people who will get refunds.

"We wanted to make sure that people weren't overwithheld or underwithheld, so we ran lots of models," Mnuchin said. He later added that he hopes Democrats "are focused on doing things that are good for the economy and the American people."

Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenWyden says foreign hackers targeted personal accounts of senators, staffers Some employees' personal data revealed in State Department email breach: report Hillicon Valley: North Korean IT firm hit with sanctions | Zuckerberg says Facebook better prepared for midterms | Big win for privacy advocates in Europe | Bezos launches B fund to help children, homeless MORE (D-Ore.) expressed concerns about the pace at which the new tax law is being implemented.

“Republicans are using brute force and speed to implement a law that will deliver a financial blow to hardworking Americans all across the country,” he said in a statement. “I look forward to GAO’s independent review of these tables, which will expose whether the Trump administration is tampering with Americans’ paychecks, resulting in a whopping tax bill next year.”

But congressional Republicans cheered the announcement from Treasury and the IRS.

"When these new rates are implemented, the American people should check their paychecks to see how much more of their hard-earned money they will keep,” said House Majority Leader Kevin McCarthyKevin Owen McCarthyOn The Money: Midterms to shake up House finance panel | Chamber chief says US not in trade war | Mulvaney moving CFPB unit out of DC | Conservatives frustrated over big spending bills Midterms to shake up top posts on House finance panel The Hill's Morning Report — Sponsored by United Against Nuclear Iran — Kavanaugh confirmation in sudden turmoil MORE (R-Calif.).  

- Updated at 3:45 p.m.