How Much Will Your Paycheck Increase In 2018?

Family FinancesNewsroom
Written By gbfadmin

U.S taxpayers have a big reason to celebrate this week. By the end of February, you should see your paycheck increase. The government released the new payroll withholding tables this week which will lower the amount of taxes withheld from your paycheck and increase your take home pay.  Naturally the next question is "How much will my paycheck go up?" Out of curiously, I spent my Saturday morning comparing the 2017 tax tables to the new 2018 tax tables to answer that question. Yes, this is what nerds do on their weekends.

The Calculation

Like most financial calculations, it's long and boring. I will provide you with the cliff notes version. The government provides your company with tax withholding tables that they enter into the payroll system. It tells your employer how much to withhold in fed taxes from each pay check. The three main variables in the calculation are:

  • Payroll frequency (weekly, bi-weekly, etc)

  • The number of withholding allowances that you claim

  • The amount of your pay

Single Filers or Head of Household

If you are a single or head of household tax filer, I ran the following calculations based on a bi-weekly payroll schedule and an employee claiming one withholding allowance. The table below illustrates how much your annual take home pay may increase under the new tax withholding tables at various salary levels.

withholding tables - single filer

withholding tables - single filer

Based on this analysis, it looks like a single filer’s paycheck will increase between 2% – 3% as soon as the new withholding tables are entered into the payroll system. If you want to know how much your bi-weekly pay will increase, just take the annual numbers listed above and divide them by 26 pay periods. If the payroll frequency at your company is something other than bi-weekly or you claim more than one withholding allowance, your percentage increase in take home pay will deviate from the table listed above.

Married Couples Filing Joint

For employees that are married and file a joint tax return, below is the calculations based on a bi-weekly payroll schedule and two withholding allowances. The table below illustrates how much your annual take home pay may increase under the new tax withholding tables at various salary levels.

payroll tax withholding table - married

payroll tax withholding table - married

Even though I added an additional withholding allowance in the calculation for the married employee, I was surprised that the “range” of the percentage increase in the take home pay for a married employee was noticeably wider than a single tax filer. As you will see in the table above, the increase in take home pay for an employee in this category range from 1.5% – 3.1%.

Another interesting observation, in the single filer table, the percentage increase in take home pay actually diminished as the employee’s annual compensation increased. In contrast, for the married employee, the percentage increase in annual take home pay gradually increased as the employee’s annual salary increased. Conclusion…..get married in 2018? Nothing says love like new withholding tables.

Michael Ruger

About Michael.........

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

Related Posts
Avoid Taking Auto Loans For More Than 5 Years – The Negative Equity Wave
Avoid Taking Auto Loans For More Than 5 Years – The Negative Equity Wave

There is a negative equity problem building within the U.S. auto industry. Negative equity is when you go to trade in your car for a new one but the outstanding balance on your car loan is GREATER than the value of your car. You have the option to either write a check for the remaining balance on the loan or “roll” the negative equity into your new car loan. More and more consumers are getting caught in this negative equity trap.

How Much Should You Have In An Emergency Fund?
How Much Should You Have In An Emergency Fund?

Establishing an emergency fund is an important step in achieving financial stability and growth. Not only does it help protect you when big expenses arise or when a spouse loses a job but it also helps keep your other financial goals on track.

Kiddie Tax & Other Pitfalls When Gifting Assets To Your Kids
Kiddie Tax & Other Pitfalls When Gifting Assets To Your Kids

Before you gift assets to your children make sure you fully understand the Kiddie Tax rule and other pitfalls associated with making gift to your children……….

Should You Pay Down Debt or Invest Idle Cash?
Should You Pay Down Debt or Invest Idle Cash?

When you have a large cash reserve, should you take that opportunity to pay down debt or should you invest it? The answer is “it depends”.

It depends on: ….

How Much Does Your Car Insurance Increase When You Add A Teenager To Your Policy?
How Much Does Your Car Insurance Increase When You Add A Teenager To Your Policy?

How much will the cost of your car insurance increase once you add a teenager to your policy. Here are a few strategies for reducing the cost……

College Savings Account Options
College Savings Account Options
When You Make Cash Gifts To Your Children, Who Pays The Tax?
When You Make Cash Gifts To Your Children, Who Pays The Tax?

A very common question that we frequently receive from clients is “If I want to make a cash gift to my kids, do I have to pay gift taxes?” The answer to that question depends on number of items such as: The amount of the gift

Do I Have to Pay Tax When I Sell My House?
Do I Have to Pay Tax When I Sell My House?

When you sell your primary residence, and meet certain requirements, you may be able to exclude all or a portion of your capital gain in the property from taxes. In this article, I am going to cover the $250,000

How To Protect Assets From The Nursing Home
How To Protect Assets From The Nursing Home

When a family member has a health event that requires them to enter a nursing home or need full-time home health care, it can be an extremely stressful financial event for their spouse, children, grandchildren, or caretaker

How Much Life Insurance Should You Have? Top 8 Factors
How Much Life Insurance Should You Have? Top 8 Factors

When we are assisting clients in building their personal financial plan, inevitably one of the most frequent questions that comes up is: “How much life insurance should I have?”

Requesting Mortgage Forbearance: Be Careful
Requesting Mortgage Forbearance: Be Careful

Due to the rapid rise in the unemployment rate as a result of the Coronavirus, Congress passed the CARES Act which includes a provision that provides mortgage relief to homeowners that have federally-backed mortgages.

IRS Stimulus Checks To Individuals: Eligibility & Timing
IRS Stimulus Checks To Individuals: Eligibility & Timing

The U.S. Senate recently passed the CARES Act which was put in place to help stabilize the economy in the wake of the Coronavirus containment efforts. One of the key items in the bill are the stimulus checks that the IRS will issue to

$5,000 Penalty Free Distribution From An IRA or 401(k) After The Birth Of A Child or Adoption
$5,000 Penalty Free Distribution From An IRA or 401(k) After The Birth Of A Child or Adoption

New parents have even more to be excited about in 2020. On December 19, 2019, Congress passed the SECURE Act, which now allows parents to withdraw up to $5,000 out of their IRA’s or 401(k) plans following the birth of their child

4 Things That Elite Millennials Do To Fast Track Their Careers
4 Things That Elite Millennials Do To Fast Track Their Careers

As a young professional, your most valuable asset is your career. While you can watch endless videos on the benefits of making Roth IRA contributions or owning real estate, at the end of the day if you're making $400,000 instead of

Should I Payoff My Mortgage Early?
Should I Payoff My Mortgage Early?

As a financial planner, clients will frequently ask me the following question, “Should I apply extra money toward my mortgage and pay it off early?”. The answer depends on several factors such as:

Do I Have To Pay Tax On A House That I Inherited?
Do I Have To Pay Tax On A House That I Inherited?

The tax rules are different depending on the type of assets that you inherit. If you inherit a house, you may or may not have a tax liability when you go to sell it. This will largely depend on whose name was on the deed when the house was passed to you. There are also special exceptions that come into play if the house is owned by a trust, or if it was gifted

How Much Emergency Fund Should You Have And How To Get There
How Much Emergency Fund Should You Have And How To Get There

If you watched the nightly news during the latest government shutdown you would have seen stories about how people struggle when they aren’t getting a paycheck. Most Americans are not immune to having a set back at a job and it is a scary feeling to not know when the next paycheck will come. The emergency fund is what will help you bridge the

Can I Open A Roth IRA For My Child?
Can I Open A Roth IRA For My Child?

Parents always want their children to succeed financially so they do everything they can to set them up for a good future. One of the options for parents is to set up a Roth IRA and we have a lot of parents that ask us if they are allowed to establish one on behalf of their son or daughter. You can, as long as they have earned income. This can be a

Moving Expenses Are No Longer Deductible
Moving Expenses Are No Longer Deductible

If you were planning on moving this year to take a new position with a new company or even a new position within your current employer, the moving process just got a little more expensive. Not only is it expensive, but it can put you under an intense amount of stress as there will be lots of things that you need to have in place before packing up and

Warning To All Employees: Review The Tax Withholding In Your Paycheck Otherwise A Big Tax Bill May Be Waiting For You
Warning To All Employees: Review The Tax Withholding In Your Paycheck Otherwise A Big Tax Bill May Be Waiting For You

As a result of tax reform, the IRS released the new income tax withholding tables in January and your employer probably entered those new withholding amounts into the payroll system in February. It was estimated that about 90% of taxpayers would see an increase in their take home pay once the new withholding tables were implemented.

The Top 2 Strategies For Paying Off Student Loan Debt
The Top 2 Strategies For Paying Off Student Loan Debt

With total student loan debt in the United States approaching $1.4 Trillion dollars, I seem to be having this conversation more and more with clients. There has been a lot of speculation between president obama and student loans, but student loan debt is still piling up. The amount of student loan debt is piling up and it's putting the next generation of

The Marriage Penalty: Past and Present
The Marriage Penalty: Past and Present

Whether you're currently married or not, the new tax legislation may impact how the "Marriage Penalty" affects you. Never heard of such a thing? Let's take a look at a simple example and show how it may be different under the new tax regulation.

More Taxpayers Will Qualify For The Child Tax Credit
More Taxpayers Will Qualify For The Child Tax Credit

There is great news for parents in the middle to upper income tax brackets in 2018. The new tax law dramatically increased the income phaseout threshold for claiming the child tax credit. In 2017, parents were eligible for a $1,000 tax credit for each child under the age of 17 as long as their adjusted gross income (“AGI”) was below $75,000 for single

How Much Will Your Paycheck Increase In 2018?
How Much Will Your Paycheck Increase In 2018?

U.S taxpayers have a big reason to celebrate this week. By the end of February, you should see your paycheck increase. The government released the new payroll withholding tables this week which will lower the amount of taxes withheld from your paycheck and increase your take home pay. Naturally the next question is "How much will my paycheck go

How Much Will The Value Of Your House Drop Under The New Tax Law?
How Much Will The Value Of Your House Drop Under The New Tax Law?

It's not a secret to anyone at this point that the new tax bill is going to inflict some pain on the U.S. housing market in 2018. The questions that most homeowners and real estate investors are asking is: "How much are home prices likely to decrease within the next year due to the tax changes?" The new $10,000 limitation on SALT deductions, the lower

Will Home Equity Loan Interest Be Deductible In 2019+?
Will Home Equity Loan Interest Be Deductible In 2019+?

The answer............it depends. It depends on what you used or are going to use the home equity loan for. Up until the end of 2017, borrowers could deduct interest on home equity loans or homes equity lines of credit up to $100,000. Unfortunately, many homeowners will lose this deduction under the new tax law that takes effect January 1, 2018.

Do I Make Too Much To Qualify For Financial Aid?
Do I Make Too Much To Qualify For Financial Aid?

If you have children that are college-bound at some point you will begin the painful process of calculating how much college will cost for both you and them. However, you might be less worried about the financial aspects of your child going to college after viewing some of the Bloomsburg student apartments for rent on the market at the moment.

Tax Reform: Your Company May Voluntarily Terminate Your Retirement Plan
Tax Reform: Your Company May Voluntarily Terminate Your Retirement Plan

Make no mistake, your company retirement plan is at risk if the proposed tax reform is passed. But wait…..didn’t Trump tweet on October 23, 2017 that “there will be NO change to your 401(k)”? He did tweet that, however, while the tax reform might not directly alter the contribution limits to employer sponsored retirement plans, the new tax rates

5 Options For Money Left Over In College 529 Plans
5 Options For Money Left Over In College 529 Plans

If your child graduates from college and you are fortunate enough to still have a balance in their 529 college savings account, what are your options for the remaining balance? There are basically 5 options for the money left over in college 529 plans.

Equifax Data Breach: How To Protect Yourself
Equifax Data Breach: How To Protect Yourself

Equifax, a credit agency, had a data breach that resulted in an estimated 143 million people having their personal information compromised. Surprisingly enough, the greatest risk is right not now but rather a few months down the road. After your data is stolen, your information is sold on the black market, and then the bad guys figure out how they

gbfadmin
Previous

More Taxpayers Will Qualify For The Child Tax Credit
Next

Business Owners: Strategies To Reduce Your Taxable Income To Qualify For The New 20% Qualified Business Income Deduction