The Internal Revenue Service (IRS) in the US has updated its Tax Withholding Estimator to incorporate changes to credits and deductions under the One, Big, Beautiful Bill (OBBB).
In a statement, the IRS said the tool now accounts for provisions including “no tax on tips, no tax on overtime, and other tax benefits”.
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The IRS Tax Withholding Estimator is a free online tool designed to help workers and retirees estimate how much federal income tax should be withheld from pay cheques now to cover taxes due next year.
According to the IRS, the updated estimator reflects OBBB-related changes beyond tips and overtime. These include “no tax on car loan interest and the deduction for seniors”.
The estimator also more accurately reflects OBBB modifications linked to family related credits, homeownership and charitable giving.
The IRS statement said: “The estimator guides taxpayers step-by-step through entering income, withholding, credits and deductions, and takes around 25 minutes on average (less for those with simpler financial situations).
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By GlobalData“By entering information about income, dependents, deductions and multiple jobs, taxpayers receive a personalised recommendation on whether to adjust withholding.”
If an adjustment is suggested, the estimator supports completion of a new Form W-4, Employee’s Withholding Certificate, or Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments PDF, for submission to an employer or pension provider.
The IRS said the estimator is available 24/7 and does not require users to log in or provide personally identifiable information.
The estimator will be useful for taxpayers who want to see how OBBB provisions affect their withholding. It may also help those who have more than one job or a working spouse.
The IRS can also benefit people who have experienced a recent life change such as marriage, divorce, or the birth or adoption of a child. It can help taxpayers who itemise deductions, including mortgage interest or charitable contributions.
Additionally, the Tax Withholding Estimator can be useful for taxpayers who receive income without automatic withholding, as well as those who owed additional tax or received a larger-than-expected refund during the most recent filing season.
