Withholding Order Will Tax Employers

President Bush’s order to reduce federal withholding taxes is expected to give a quick boost to the economy this spring, but it will mean added work for employers.

Under the initiative, the U.S. Treasury Department will adjust IRS withholding tables to reduce the amount automatically taken out of the paychecks of 89 million Americans. That includes married persons with annual taxable incomes of less than $90,200 and single people with taxable earnings of less than $53,200. This change will increase their annual average take-home pay by $300--or an estimated total of $25 billion in 1992.

Administration officials noted that many businesses already review withholding records annually in January. Even so, most U.S. businesses will end up spending more time--and in some cases more money--to make the adjustments.

Employers will receive a tax guide by Feb. 14, outlining the new withholding tables. The Treasury Department expects most employers to make the adjustments by March 1. However, the IRS said many employers with computerized payroll operations are expected to have the changes in place well before then.