State Will Begin Taking Less Out Of Workers’ Paychecks Starting Tuesday

Withholding Tables Have Been Changed For First Time Since 2009

Wisconsin will begin taking less money out of worker paychecks starting Tuesday. Photo: 401(K) 2012 (CC-BY-SA).

Starting Tuesday, the state of Wisconsin is going to take less out of worker’s paychecks, as changes to withholding are implemented.

Withholding tables have not changed since 2009. State Secretary of Revenue Rick Chandler says recent income tax reductions signed into law prompted the change. Because of a smaller tax obligation, fewer taxes needed to be taken out of workers’ paychecks.

“They’re benefitting in two ways: lower taxes overall and more of the money saved up front,” said Chandler.

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Changes in withholding tables are infrequent, says Andrew Reschovsky, a professor emeritus of economics at University of Wisconsin-Madison. He says that’s because tax systems don’t change all that often. While some people may like having more money in their pockets, others prefer a larger tax refund.

“Refunds are a form of forced saving, said Reschovsky. You are effectively lending the government some money each week during the year and getting it back in one lump sum. And those that find it difficult to put money away, particularly those of low income – that’s a real challenge.”

The Wisconsin Taxpayer Alliance (WTA) says the state has withheld more than it needs for at least a decade. WTA president Todd Berry says governments strapped for cash saw it as an interest-free loan.

“Frankly, it’s a matter of being transparent and honest with taxpayers, said Berry. In other words, take what you need from their paycheck based on tax law, but don’t take a lot of extra.”

On average, a family of four with two wage earners of median income will see an extra $58 per month in their paycheck.