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 TrumpRosenstein expected to leave DOJ next month: reports Allies wary of Shanahan's assurances with looming presence of Trump States file lawsuit seeking to block Trump's national emergency declaration 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 MnuchinWhite House confirms new trade talks with China Hillicon Valley: Facebook weighs crackdown on anti-vaccine content | Lyft challenges Trump fuel standards rollback | Illinois tries to woo Amazon | New round of China trade talks next week On The Money: Trump declares emergency at border | Braces for legal fight | Move divides GOP | Trump signs border deal to avoid shutdown | Winners, losers from spending fight | US, China trade talks to resume next week 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 WydenKremlin seeks more control over internet in Russia Wisconsin governor to propose decriminalization of marijuana High stakes as Trump, Dems open drug price talks 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 McCarthyCongress allows Violence Against Women Act to lapse Mandatory E-Verify: The other border wall Bret Stephens: Would love to see Hannity react when Dem declares climate change emergency MORE (R-Calif.).  

- Updated at 3:45 p.m.