The Internal Revenue Service won’t adjust current income-tax withholding levels for workers and employers to account for President Donald Trump’s new tax law, delaying savings from retroactive cuts for most taxpayers.
The move will enlarge refunds paid out to taxpayers early next year, ahead of the midterm congressional elections in November 2026.
Employers and payroll providers should stick to using their current procedures for reporting and withholding, rather than adjusting to account for tax breaks included in the law enacted last month, the agency said in an advisory Thursday. The delay will allow the agency, businesses and tax professionals enough time to implement the changes, the IRS said.
As a result, most workers won’t immediately collect the tax breaks, such as a higher standard deduction and exemptions for tipped and overtime wages, until they file their taxes early next year. Congressional Republicans are counting on lower tax bills and higher refunds to win over voters, who polls show currently disapprove of the president’s signature legislative achievement.
