The Treasury introduced new withholding tables Thursday to reflect the changes made by the GOP tax law, saying that 90 percent of earners will see greater take-home pay under the law.
Employers are expected to implement the new withholding tables in paychecks by Feb. 15.
"With this guidance, most American workers will begin to see bigger paychecks. We estimate that 90 percent of wage earners will experience an increase in their take-home pay," Treasury Secretary Steven Mnuchin said in a statement.
"These new tables will help deliver the tax cuts as soon as possible, to as many people as possible, with as little disruption as possible," Mnuchin said at a White House press briefing.
The changes will reflect the lower tax rates including in the law signed by President Trump in December. They also will take into account the larger standard deduction and the repealed personal exemptions.
Mnuchin said that the new tables are supposed not to change the overall number of people who receive refunds from the Treasury when they file their taxes in the spring of next year. That share is supposed to remain steady at about three-quarters of taxpayers.
To help workers ensure that they are having the correct amount withheld from their paychecks, the IRS is supposed to release a calculator in February that will allow workers to check the amount their employers are deducting. The Treasury will mount a marketing campaign to encourage people to double-check their withholding amounts, Mnuchin said. Withholding too much means that an employee is effectively giving the government an interest-free loan. Withholding too little means that the employee could face the surprise of having to send the government a check next April.
The Treasury also noted that it aimed this year to finalize plans for new W-4 forms in 2019. The forms are used to allow employers to withhold the correct amount.
Republicans are counting on the greater take-home pay to turn the tax law into an advantage for them in this year's midterm elections.
Democrats have warned the Treasury and the IRS against using inaccurate withholding to inflate the size of the tax cuts to help with the elections, a maneuver that would result in more people having to cut checks to the Treasury in April 2019.
Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said Thursday that “Republicans are using brute force and speed to implement a law that will deliver a financial blow to hardworking Americans all across the country" and said that he would await the results of a Government Accountability Office review of the withholding tables that he requested.
Mnuchin bristled at the charge Thursday, noting that the tables are intended to keep steady the amount of people who would see refunds or have to pay more in April of 2019. "Any claims that we are doing this for political issues are ridiculous, OK?" he said.