The 2026 tax tables have been updated based on a new law (P.L. 119-21). This law makes several previous tax rules permanent: individual tax rates will stay where they are, the higher standard deduction is permanent, and personal exemptions are permanently eliminated.
IRS Tax Tables 2025 pdf
- Form W-4 (For Employees): The form has been updated so employees can claim the new deductions mentioned below. Also, if you are claiming an exemption from federal income tax withholding, you no longer have to manually write “Exempt” on the form—there is now a simple checkbox below Step 4(c).
- Form W-4P (For Pension/Annuity Receivers): Similar to the regular W-4, this form now includes a checkbox below Step 4(c) to request “no withholding,” replacing the old method of writing it out by hand. Note: Form W-4P is only for regular, periodic payments. If you are getting a one-time payout or rollover, you must use Form W-4R.
New Tax Breaks for Tips and Overtime (2025–2028)
- For Tipped Workers: You can now deduct up to $25,000 of cash or credit card tips on your tax return (mandatory service charges do not count).
- For Overtime Workers: You can deduct up to $12,500 of qualified overtime pay (or $25,000 if you are married and filing jointly).
- How to Get the Money Now: Instead of waiting for a tax refund to get the benefit of these new deductions, workers can submit an updated Form W-4 to their employer. The employer will adjust the withholding so the worker gets to keep more money in their regular paycheck. (Note: Regular Medicare and Social Security taxes still apply to both tips and overtime).
Notes for Employers and Payers
- Reporting: Employers must report these qualified tips and overtime payments to the IRS and the Social Security Administration. The IRS is providing some leniency and transition relief for the 2025 reporting year to help businesses adjust.
- Old Forms: If you have employees still using very old W-4 forms (from 2019 or earlier) or old W-4P forms (2021 or earlier), the IRS provides a “computational bridge” (a math formula) to help you calculate their taxes to match the new systems.
- Digital Forms: You are officially allowed to set up an electronic system to collect these forms from your employees.
