IRS Flags Way to Avoid Tax Surprises
New IRS estimator reflects tax law changes and helps workers adjust withholding, potentially increasing paychecks while avoiding surprise tax bills.
WASHINGTON – The Internal Revenue Service is urging taxpayers to take action now to potentially increase their take-home pay and avoid tax-time surprises.
An updated Tax Withholding Estimator is now available to reflect recent changes from the One, Big, Beautiful Bill and can help retirees save time and money on calculating their withholdings and stop overpaying on taxes.
“Withholding that closely matches a taxpayer’s anticipated tax liability can help prevent unexpected tax bills and potential underpayment penalties. It can also help taxpayers avoid over-withholding and increase take-home pay throughout the year,” the Internal Revenue Service said in a statement.
The updated calculator accounts for several new provisions, including the elimination of taxes on tips and overtime pay.
It also includes the deduction for seniors and the removal of taxes on car loan interest, while more accurately reflecting modifications to family-related credits, homeownership, and charitable giving, according to the IRS.
Taxpayers who use the tool could see more on their paycheck by adjusting their withholdings. According to the IRS, the process takes an average of 25 minutes.
Taxpayers are urged to gather their most recent pay statements and a copy of their latest federal income tax return before using the estimator to get the most accurate results.
If the estimator recommends changes, users can complete a new Form W-4, Employee’s Withholding Certificate, or Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments, to submit to their employer or pension provider.
The IRS notes that recalculating withholdings under the OBBB provisions is especially important for those who:
- Have more than one job or a working spouse
- Experienced a major life change recently, such as marriage, divorce, the birth or adoption of a child
- Claim credits such as the Child and Dependent Care Credit or Adoption Credit
- Itemize deductions, including mortgage interest or charitable contributions
- Receive income without automatic tax withheld, such as gig, freelance, or investment income
- Owed additional tax or received a larger-than-expected refund during their most recent filing season
The free tool is available 24 hours a day and does not require a login or personal information.
©2026 Advance Local Media LLC. Distributed by Tribune Content Agency, LLC.