By Samantha Bomkamp
WWR Article Summary (tl;dr) The amount of extra take-home pay varies widely depending on how much you earn and how many personal allowances you selected on your form W-4. Generally, the boost will range from a few dollars per paycheck to several hundred.
Most Americans are starting to see one of the early benefits of the new tax law: a bump in take-home pay.
Paychecks are increasing for about 90 percent of Americans due to the tax overhaul, according to the U.S. Treasury, a result of changes in withholding tables set by the IRS.
The deadline for all employers to make the adjustments in paychecks is Thursday. So while some workers have already seen the increases, others will see their first sweetened checks this week or next.
The amount of extra take-home pay varies widely depending on how much you earn and how many personal allowances you selected on your form W-4, which most employees fill out at the start of each new job. Generally, the boost will range from a few dollars per paycheck, just enough to cover an extra latte, to several hundred.
But experts urge taxpayers to be wise about the extra money. The higher paychecks could come at a cost down the road, because in some cases, the extra money is the result of not having enough taxes taken out of your paycheck, which means you could owe more when you prepare your 2018 return next year. In order to avoid that, it’s important to check your level of withholding with your employer soon after you see the higher checks roll in.
“The only way to tell if withholding is adequate, too low or too little is to calculate a projected tax number,” said Sheryl Rowling of Morningstar. “The worst-case scenario would be to assume that a reduction in withholding is extra spending money only to find out in April (2019) that there’s a big balance due.”