The House and Senate passed different versions of the tax reform bill, which means a Conference Committee with members from both houses of Congress will meet to reconcile the differences between the two bills. Both bills include changes to income tax rates, standard deductions and personal exemptions, effective after December 31, 2017. This means that withholding tables and Form W-4 will need major revisions.
What Employers Need to Know
The IRS is monitoring this legislation and once any tax bill becomes law, they will move as quickly as possible to assess the impact and implement changes. There are no plans to release any guidance for 2018 until the tax bill becomes law.
Employers may need to continue using the 2017 withholding tables until the 2018 versions are released. Even if the new tables are to take effect on January 1, 2018, the IRS will need time to incorporate all of the changes made by the new law. Payroll professionals and software developers will need time for programming and testing, so there will be a transition period to comply with the new withholding tables, similar to the method used in 2009.
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