The Internal Revenue Service reminds taxpayers that proper tax withholding now is key to avoiding surprises when they file their tax return next year. Making any needed adjustments earlier in the year means taxpayers won’t have to make a big change later in the year to catch up.
The IRS Tax Withholding Estimator is a free online tool that helps workers, independent contractors and retirees determine if they are having the right amount of federal income tax withheld from their paychecks. Using it can prevent taxpayers from having an unexpectedly large tax bill or a substantial refund when they file in 2026.
For employees, “withholding” refers to the federal income tax portion of each paycheck that an employer takes out for tax purposes. It can also mean the amount from earnings that self-employed people and others voluntarily set aside to pay their estimated taxes.
After using the Tax Withholding Estimator, taxpayers can determine if they need to submit an updated Form W-4, Employee’s Withholding Certificate, to their employer or adjust the amount they voluntarily set aside for tax purposes. By adjusting tax withholding, individuals can prevent owing money and potential penalties at tax time or adjust withholdings to increase take-home pay instead of waiting for a refund.
For more information on the IRS Tax Withholding Estimator, review the Tax Withholding Estimator Frequently Asked Questions link online at IRS.gov.
