The new federal tax plan is now in effect -- and it's going to mean more spending money for most people, at least in the short term.
Most workers across the country will have less tax money withheld from their pay, now that the Internal Revenue Service has released new withholding tables and instructed employers to make adjustments.
How much will paychecks change?
The exact amount will vary depending on an individual's earnings, frequency of pay, and whether deductions are claimed. U.S. Treasury Secretary Steven T. Mnuchin said 90 percent of workers will see an increase in their paychecks. The Tax Policy Center, meanwhile, said 80 percent of taxpayers will receive an overall tax cut in the 2018 tax year.
A single person who earns $50,000 a year, has no children, claims no deductions, and is paid biweekly could receive as much as $61 more per paycheck under the new tax structure.
A married couple with two children under 17 and a household income of $75,000 would receive an overall tax break of $2,119 in 2018, according to a Tax Policy Center analysis. A married couple with two children an income of $30,000, meanwhile, would receive a tax break of $817 -- or roughly the same percentage.
When will these changes appear in paychecks?
The IRS guidelines, published last month, instructed employers to implement changes by Feb. 15.
For payroll departments, making changes quickly -- during weeks when they are also sending out W-2 forms to employees for their 2017 taxes -- is a challenge, said Alice Jacobsohn, senior manager of government relations for the American Payroll Association.
Companies that use software services or vendors for payrolls will need to ensure those third parties make adjustments, and then test the changes themselves, Jacobsohn said.