The W-4 Form Changed in Major Ways — Here's What's Different
The new version of Form W-4 was updated to be in line with the Tax Cuts and Jobs Act (TCJA) that was passed in 2018. The form has been simplified, and certain sections have been removed. If you want to update your federal income tax withholding, here's what you need to know about the W-4 changes and how they impact your taxes.
The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process. Check our One Big Beautiful Bill article for more information.
Key Takeaways
- Form W-4 changed because the Tax Cuts and Jobs Act removed personal exemptions, increased the Standard Deduction, and made the Child Tax Credit available to more people.
- As before, you'll need to provide your first and last name, Social Security number, home address, and filing status (Single, Married Filing Separately, Married Filing Jointly, or Head of Household).
- If you work multiple jobs at the same time or are Married Filing Jointly and both you and your spouse are employed, you should fill out a new Form W-4 for each job.
- If you work one job or hold the highest paying job in your family and you have dependents, claim your dependents in Step 3 of the new form. This will adjust your withholding by accounting for the tax impact of the Child Tax Credit and the other dependents credits.
What is the new W-4 form?
The new W-4 form can more accurately determine the proper amount of withholding for federal income tax.
Whether you're filling out paperwork for a new job or got an email notification from HR, you might have noticed that the W-4 form changed from what you might have been used to. Your W-4 is what determines your federal income tax withholding, and making sure it's accurate is the first step in determining whether you get a tax refund or will owe taxes when you prepare your tax return.
The IRS made significant changes to the W-4 form in 2020 and the updated version should provide you the means to more accurately withhold federal income tax and is part of what replaced withholding allowances on the W-4. We'll go over the changes and what you should know.
Why did the IRS change the W-4 form?
The IRS changed Form W-4 to prevent taxpayers from owing money or receiving unexpectedly large refunds at tax time.
Depending on your circumstance, you might have under-withheld and owed money, or received a larger refund than usual when you filed your taxes. Ideally, Form W-4 should make it so you neither owe taxes nor get a refund when you file your tax return — which is why the IRS reworked it.
What changed under the Tax Cuts and Jobs Act?
The Tax Cuts and Jobs Act (TCJA) became law in late 2017 and significantly changed how the federal income tax system works. Here's a breakdown of the changes:
| Tax Provision | Before TCJA (2017 and earlier) | After TCJA (2018–present) | Effective Date |
|---|---|---|---|
| Personal exemptions | Taxpayers could deduct a set exemption amount ($4,050 in 2017) for themselves, their spouse, and each dependent | Eliminated entirely | January 1, 2018 |
| Standard Deduction | $6,350 (Single) / $12,700 (Married Filing Jointly) in 2017 | Nearly doubled to $12,000 (Single) / $24,000 (Married Filing Jointly) starting in 2018, adjusted annually for inflation since | January 1, 2018 |
| Child Tax Credit | $1,000 per qualifying child, with a lower income phase-out threshold | Increased to $2,000 per qualifying child, with a much higher phase-out threshold, making it available to more higher-income families | January 1, 2018 |
Why does the old W-4 form no longer work?
The 2017 tax changes didn't always work well with the previous version of Form W-4.
The older version relied on calculating a number of allowances, which you then used, along with any additional withholding amount you wanted, to figure out how much federal income tax to withhold from your paycheck.
The allowance system tied to the use of exemptions on your tax return.
When the Tax Cuts and Jobs Act removed these exemptions, the Form W-4 no longer estimated as accurately how much your employer needed to withhold from your paychecks.
The first step the IRS implemented was to change the withholding tables. Employers use these tables along with the information on your Form W-4 to calculate federal income tax withholding.
How did the W-4 form change?
The Form W-4 is now a full page instead of a half page, and yet it's still easier to understand. For starters, a lot of the basics have stayed the same.
You still have to provide your name, address, filing status and Social Security number.
As with the prior version of the form, the new W-4 allows you to claim exempt status if you meet certain requirements.
What did the old W-4 form include?
In 2019 and years prior, Form W-4 only required you to input:
- The number of allowances you were claiming.
- Any additional amount you wanted to be withheld from your paycheck.
To calculate the number of allowances, you could use separate worksheets that many found complicated.
What are the different sections of the new W-4 form?
The new Form W-4 is a bit easier to understand because each section shows why you're making adjustments. There are now three main sections used to help determine your withholding. You only complete each section if it applies to your situation.
| Step | Section Name | Complete This Step If... |
|---|---|---|
| Step 1 | Personal Information | You're filling out any Form W-4 (always required) |
| Step 2 | Multiple Jobs or Spouse Works | You hold more than one job at a time, or you're Married Filing Jointly and both spouses work |
| Step 3 | Claim Dependents | You have dependents and are completing the W-4 for your only job, or for the highest-paying job in your household |
| Step 4 | Other Adjustments | You have non-wage income (dividends, interest), want to claim deductions beyond the Standard Deduction, or want extra withholding taken out |
Personal Information (Step 1)
To begin with, you'll need to add your personal information to the appropriate boxes. This includes your:
- First and last name
- Social Security number
- Home address
- Filing status (choosing from Single or Married Filing Separately, Head of Household, Married Filing Jointly, or Qualifying Surviving Spouse)
Multiple jobs or spouse works (Step 2)
This section is for if you work multiple jobs at the same time or are Married Filing Jointly and both you and your spouse are employed. To be accurate, both spouses should fill out the new Form W-4 for each job.
The form lists three ways you can complete this section:
| Option | Method | Use This If... |
|---|---|---|
| 1 | Online estimator (e.g., TurboTax's W-4 withholding calculator) | You want the most precise withholding calculation, regardless of how many jobs or how similar the pay is. |
| 2 | Multiple Jobs Worksheet (paper worksheet in the Form W-4 instructions) | You prefer not to use an online tool but still want a more tailored calculation. |
| 3 | Check the box for Step 2(c) on both jobs | You and your spouse (or your two jobs) have only two jobs total, and the pay for both is fairly similar. |
Claim dependents (Step 3)
If you only work one job or you're filling out a Form W-4 for the highest paying job and you have dependents, you claim them here. This section accounts for the tax impact of the Child Tax Credit and the Credit for Other Dependents.
Alternatively, if you're working on the W-4 for the lower-paying of your multiple jobs, you should skip this section.
Other adjustments (Step 4)
You can use other adjustments to make your withholding more accurate. In particular, this section offers three options.
First, you can add extra income from outside of your job, such as dividends or interest, that usually don't have withholding taken out of them. By including this, your employer takes additional federal tax withholding out of your paycheck. This may help you avoid owing taxes based on these types of other income when you file your tax return.
Next, you can account for other deductions. Since most take the Standard Deduction, that's what Form W-4 assumes unless you add extra deductions here. If you itemize or take other deductions, you may want to add them here.
Finally, you can have more federal income tax withheld from each paycheck by adding extra withholding. You can use this to either:
- Give yourself a bigger refund at tax time
- Account for other tax situations Form W-4 doesn't specifically ask about
As with Step 3, if you're filling out this W-4 for the lower-paying of your multiple jobs, you should skip this section.
TurboTax Tip:
If you itemize deductions, or receive extra income from dividends or interest, you can use the new Form W-4 to make your withholding more accurate. Pay attention to your paycheck after your new Form W-4 takes effect to see if the results are correct for your situation.
Should you fill out a new Form W-4?
Whether or not you should fill out a new W-4 form depends on your circumstances. Those starting a new job will have to fill out a new Form W-4. You don't have to start a new job to fill out a Form W-4, though.
When should you fill out a new W-4 form?
If you want your federal income tax withholding to be more accurate, you should fill out a new Form W-4. This will likely result in a change in your federal income tax withholding, which impacts the amount of your usual tax refund or the amount you usually owe. Ask your payroll or human resources department how to submit a new Form W-4.
Pay attention to your paycheck after your new Form W-4 takes effect to see if your employer is withholding more or less federal income tax.
- If your employer withholds less, your refund may be smaller, or you may owe more if nothing else changes.
- If your employer withholds more, your refund may be larger, or you may owe less if everything else stays the same.
If you don't feel the results are correct for your situation, make adjustments in the other adjustments section, submit a new Form W-4, and check the results on your paycheck after the adjustment takes effect.
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