How the Tax Reform Law Affects Employers: New Quick Reference Chart Published

Author: Rena Pirsos, XpertHR Legal Editor

A new chart has been added to XpertHR's Quick Reference Tool to help an employer comply with the sweeping tax reform law signed by President Trump on December 22, 2017. +115 H.R. 1.

The legislation affects an employer's legal compliance with several key payroll and fringe benefits provisions. It also repeals the individual mandate requirement of the Affordable Care Act (ACA), creates a new employer tax credit related to the Family and Medical Leave Act (FMLA) and eliminates the employer business deduction for certain expenses incurred in regard to sexual harassment or sexual abuse settlements that are contingent on a nondisclosure agreement. Most of the new provisions are effective January 1, 2018, but some have a future expiration date.

This new Quick Reference chart provides a comparison of the status of these provisions before the tax reform legislation (i.e., through December 21, 2017) and after the tax reform legislation.

The IRS issued the 2018 income tax withholding tables reflecting the reforms in Notice 1036, as the first in a series of steps to help improve the accuracy of withholding. In the Notice, the IRS instructs employers to begin using the 2018 tables as soon as possible, but not later than February 15, 2018, and to continue using the 2017 tables until they can implement the 2018 tables. This will enable many employees to begin seeing the effects of the changes reflected in their wage payments in February 2018. The 2018 withholding tables are designed to work with the existing Forms W-4 that employees have already filed, which minimizes the burden of employees having to file, and employers having to process, new ones for 2018 withholding.

On February 28, 2018, the IRS released a revised Form W-4 and updated the withholding tax calculator that is on its website. These can be used by new employees in 2018, and by current employees who wish to update their withholding in response to the new tax law or because of changes in their personal circumstances in 2018. The IRS anticipates making further changes regarding withholding for 2019.

Additional XpertHR Quick Reference charts, such as Annual Retirement Plan COLAs and Fringe Benefit Limitations, ACA Information-Reporting Requirements and The FMLA's Interaction With Other State and Federal Laws, have been updated to reflect the changes made by the tax reform law.