Updated 2018 Income Tax Withholding Tables

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Image of accountant carefully reviewing document with new income tax withholding tables for 2018

The IRS released updated income tax withholding tables for 2018 as a result of the passed tax reform legislation.

Employers are encouraged to start using the 2018 tables as soon as possible, but no later than February 15, 2018.

Employees can expect to see increases in their paychecks in February, though this will vary depending on how quickly employers implement the new tables and how often employees are paid.

The new tables work with Forms W-4 that employees have already filed with their employers to claim withholding allowances. The IRS is working on updating Form W-4. But, they advise continuing to use the 2017 Form W-4 until the 2018 form is released.

Withholding allowance amounts

Withholding allowance amounts have increased from 2017. If your company uses the percentage method for income tax withholding, the withholding allowance amounts for 2018 are listed below. The 2017 amounts are also listed for comparison.

Payroll Period2018 Amount for One Withholding Allowance2017 Amount for One Withholding Allowance
Weekly$79.80$77.90
Biweekly$159.60$155.80
Semimonthly$172.90$168.80
Monthly$345.80$337.50
Quarterly$1,037.50$1,012.50
Semiannually$2,075.00$2,025.00
Annually$4,150.00$4,050.00
Daily/Miscellaneous$16.00$15.60

Click here to view the 2018 income tax withholding tables – broken down by payroll period and filing status.

This document also shows you how to calculate the tax that will be withheld from your paycheck based on your number of withholding allowances, wages, filing status, and payroll period.

 

2018 social security and Medicare tax

The social security tax remains at 6.2% in 2018 with a wage base limit of $128,400.

The Medicare tax rate also remains at 1.45% for the employer and employee in 2018. The Medicare tax has no wage base limit.

In addition to withholding Medicare tax at 1.45%, employers must withhold a 0.9% Additional Medicare Tax from wages more than $200,000 that are paid to an employee in a calendar year.

This is one of the first steps the IRS has taken as a result of the new tax law. Remember, employers must implement these new rates by February 15, 2018 and should notify their employees accordingly.

 

Have questions about taxes and withholding? Let’s talk!