Even though the tax filing deadline for tax year 2025 passed a couple weeks ago, it’s not too early to start planning for next year so that you can avoid any unpleasant surprises. One easy thing you can do is check for proper tax withholding.
What is withholding?
Taxpayers need to pay their tax as they receive their income, and they do this through withholding. For employees, “withholding” refers to the federal income tax portion of each paycheck that an employer takes out for tax purposes. It can also be the amount from earnings self-employed people and others voluntarily set aside to pay their estimated taxes.
How to check your withholding
The IRS Tax Withholding Estimator is a free, easy-to-use tool that can help you estimate the amount of federal income tax you need to withhold from your paycheck now in order to pay for the taxes you will owe next year.
This estimator has been updated to reflect the changes to credits and deductions under the One, Big, Beautiful Bill. This includes the deductions for tips, overtime, car loan interest and enhanced deduction for seniors. It also accounts for updates tied to family-related credits, homeownership, and charitable giving.
Why check your withholding?
Checking your withholding now gives you a chance to stay on top of how your tax might change due to personal life changes, such as buying a home, changing jobs, having a child or changing your marital status.
It will also help you:
- Prevent owing money and potential penalties at tax time
- Adjust withholding to increase take-home pay instead of waiting for a refund
What else you need
Remember that your withholding estimate is only as accurate as the information you enter. So when estimating your withholding, be sure to have the following on hand:
- All income statements, including your spouse’s if filing jointly
- Data from other sources of earnings
- Your most recent income tax return
If all seems like too much, or if something seems confusing, we’re always here to help. Just contact our office and we can help you estimate your withholding for the upcoming year.