Federal income tax withholding may need adjustment – Tax Services

Federal income tax withholding may need adjustment

The Tax Cuts and Jobs Act changed the way taxable income is calculated and reduced the tax rates on that income. The IRS had to address and make changes to income tax withholding in response to the new law as soon as possible after it passed. This issue affects every taxpayer who receives a paycheck. The U.S. tax system operates on a pay-as-you-go basis. Taxpayers must generally pay at least 90 percent of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. THIS MEANS THAT…you need to pay most of your tax during the year, as the income is earned or received. If you don’t, you may owe an estimated tax penalty when you file.



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