Your Guide To The New Tax Bill
Now that the Tax Cuts and Jobs Act has passed, what will your January paycheck look like? First off, don’t stress, Journey has your back. We don’t dictate the rules, but we’ll ensure your paycheck is accurate based on the latest laws passed.
Employers and employee want to know: Will you see a bump in your take-home pay or will that number decrease?
The short and easy answer is that you won’t see anything different. Yet. That could change as early as February, once the IRS has a chance to develop and publish new withholding guidelines based on the tweaked tax brackets.
The agency released this statement on December 26th: “The IRS is working to develop withholding guidance to implement the tax reform bill signed into law on December 22. We anticipate issuing the initial withholding guidance in January, and employers and payroll service providers will be encouraged to implement the changes in February. The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.
“Use of the new 2018 withholding guidelines will allow taxpayers to begin seeing the changes in their paychecks as early as February. In the meantime, employers and payroll service providers should continue to use the existing 2017 withholding tables and systems.”
There are still seven tax brackets, but the rates and income levels changed with the new bill. We’ve created these breakdowns to help you understand how the new guidelines may impact your paycheck.
Filling Status and Taxable Income Breakdowns
| Married Filing Jointly and Surviving Spouses | |
| Taxable Income | Taxes |
| Up to $19,050 | 10% of taxable income |
| Over $19,050 but not over $77,400 | $1,905 plus 12% of excess over $19,050 |
| Over $77,400 but not over $165,000 | $8,907 plus 22% of the excess over $77,400 |
| Over $165,000 but not over $315,000 | $28,179 plus 24% of the excess over $165,000 |
| Over $315,000 but not over $400,000 | $64,179 plus 32% of the excess over $315,000 |
| Over $400,000 but not over $600,000 | $91,379 plus 35% of the excess over $400,000 |
| Over $600,000 | $161,379 plus 37% of the excess over $600,000 |
| Heads of Households | |
| Taxable Income | Taxes |
| Up to $13,600 | 10% of taxable income |
| Over $13,600 but not over $51,800 | $1,360 plus 12% of excess over $13,600 |
| Over $51,800 but not over $82,500 | $5,944 plus 22% of the excess over $51,800 |
| Over $82,500 but not over $157,500 | $12,698 plus 24% of the excess over $82,500 |
| Over $157,500 but not over $200,000 | $30,698 plus 32% of the excess over $157,500 |
| Over $200,000 but not over $500,000 | $44,298 plus 35% of the excess over $200,000 |
| Over $500,000 | $149,298 plus 37% of the excess over $500,000 |
| Unmarried Individuals (other than Surviving Spouses and Heads of Households | |
| Taxable Income | Taxes |
| Up to $9,525 | 10% of taxable income |
| Over $9,525 but not over $38,700 | $952.50 plus 12% of excess over $9,525 |
| Over $38,700 but not over $82,500 | $4,453.50 plus 22% of the excess over $38,700 |
| Over $82,500 but not over $157,500 | $14,089.50 plus 24% of the excess over $82,500 |
| Over $157,500 but not over $200,000 | $32,089.50 plus 32% of the excess over $157,500 |
| Over $200,000 but not over $500,000 | $45,689.50 plus 35% of the excess over $200,000 |
| Over $500,000 | $150,689.50 plus 37% of the excess over $500,000 |
| Married Individuals Filing Separate | |
| Taxable Income | Taxes |
| Up to $9,525 | 10% of taxable income |
| Over $9,525 but not over $38,700 | $952.50 plus 12% of excess over $9,525 |
| Over $38,700 but not over $82,500 | $4,453.50 plus 22% of the excess over $38,700 |
| Over $82,500 but not over $157,500 | $14,089.50 plus 24% of the excess over $82,500 |
| Over $157,500 but not over $200,000 | $32,089.50 plus 32% of the excess over $157,500 |
| Over $200,000 but not over $300,000 | $45,689.50 plus 35% of the excess over $200,000 |
| Over $300,000 | $80,689.50 plus 37% of the excess over $300,000 |
Keep in mind, these rates apply to your 2018 income, and will not apply when filing taxes this spring. You’ll use the tax rates that were in effect prior to the passage of the new bill. (It’s complicated, we know.)
“While the changes can be hard to understand, Journey is here to make sure your paycheck is correct, and accounts for any and all changes that may impact it. You don’t have to worry about whether or not it’s being done correctly on the back end. We’ve got you covered, rest assured. We stay on top of legislation and payroll regulations, so you don’t have to.” says Ashlee Faulkner, Shareholder, Executive Vice President of Journey.