Accordingly, a payroll update for 2018 for Advanced Accounting users is now available. Our 2018 update is now available that includes implementation of the new federal tax tables discussed below plus changes for about 10 states along with the new federal supplemental wage rate, some 941 related changes, and a new payroll tax calculator option.
More information: Advanced Accounting year end and latest payroll information
Our analysis (embedded below; an external link to the document is contained below the embed) focused on monthly wage amounts simply because most household budgets are month oriented. The monthly wages assume that they are net taxable wages. We then made a comparison of what the monthly withholding amounts were for the same wage and marital status for a range of monthly wages with withholding allowances ranging from zero to four. We then computed the monthly increase and the percent reduction in comparing 2018 to 2017. And we then also took an average increase and percent reduction for wages in the $2000/mo. to $7000/mo. range for each marital status and exemption combination. All withholding calculations were made by Advanced Accounting's payroll tax calculator.
Results: employees will see a fairly significant reduction in their federal income tax withholding once the new tables are implemented. For employees in the $2K to $7K range, the reduction will be typically in the roughly 18% range in most cases.
While the percentage reductions are fairly consistent across most wage limits and regardless of marital status, Single status results in higher monthly savings (on average in the $35 to $40 month range for the $2K to $7K ranges) because of the higher withholding amounts assessed to employees with that status.
We noticed some odd/inconsistent results in comparing Single status withholding differences in higher monthly income ranges (i.e. with nominal differences compared to all others analyzed).
2017 to 2018 FIT comparison document link