Bigger checks in 2019

Tuesday, November 20, 2018

This week, the Iowa Department of Revenue issued new income tax withholding tables for 2019 that will conform to tax cuts passed by the Iowa House last session.

This means-paychecks will be bigger starting in January. This is because employers will reduce the amount of Iowa tax withheld from their employees' paychecks, resulting in increased take-home wages for Iowa workers.

Prior to the reforms enacted last session, the withholding tables had remained the same since 2006. These tables are designed to align the amount of income tax employers withhold from employees and remit to the state with current tax rates. The department estimates this change in withholding tables will result in a reduction of $273 million in state income tax withheld in 2019. The tables will continue to change over the next five years, reflecting the phasing in of more tax cuts and reforms.

A link to assist employers with the withholding formulas can be found on the Iowa Department of Revenue's website. Employees can make changes to their Iowa W-4 (withholding) form by contacting their employer, but employers will automatically make withholding adjustments based on the new tables starting in January.