The IRS has announced changes in withholding rates for 2009 and 2010. These changes are the result of the Making Work Pay provision of the American Recovery and Reinvestment Act (ARRA), which provide a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns. This tax credit will be calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.
New Withholding Amounts
Because take-home pay will be increased for many employees, this tax credit will mean that employers will be required to reduce withholding for eligible employees. You will need to use the new withholding tables starting immediately - no later than April 1, 2009. If you use a tax preparer or payroll service, make sure they are properly calculating withholding using the new amounts.
No New W-4 Needed
Employees do not need to submit new W-4 forms; the changes are the responsibility of the employer.
New Withholding Tables
Here is link to the new withholding tables.
