Why You Should Check Your Tax Withholding in 2026

Many Americans are expected to receive larger tax refunds when filing their 2025 returns in early 2026. Because of outdated withholding tables and recent law changes, taxpayers may be withholding more than necessary. Taking time to check your tax withholding now helps avoid giving the government an interest‑free loan and could increase your take‑home pay throughout the year.

Why Withholding Matters

Federal income tax is a pay‑as‑you‑go system, meaning taxes are paid through withholding from each paycheck or via estimated tax payments throughout the year. If too much tax is withheld, you may get a large refund — but that means you gave the government an interest‑free loan. If too little is withheld, you may owe money or face penalties when you file. The goal is to balance withholding with your actual tax liability.

2025 Refund Estimates and 2026 Planning

This year, refunds are expected to be higher than usual because withholding tables were not updated to reflect recent tax law changes. These new provisions include increased deductions for seniors, expanded SALT caps, and new breaks for tip and overtime income, among others. Adjusting withholding now — via a new W‑4 form with your employer — can help align taxes taken from paychecks with your real tax bill.

How to Adjust Your Withholding

If you decide to check your tax withholding:

• Review your income, filing status, dependents, and deductions.

• Use the IRS Tax Withholding Estimator or a similar tool to estimate correct withholding.

• Submit a new W‑4 form to your employer to update how much federal tax is withheld from your paycheck.
  This adjustment can be made at any time during the year and helps prevent underpayment penalties or overly large refunds.

Benefits of Reassessing Withholding

Checking your withholding has several benefits:

• You can increase your take‑home pay immediately by reducing excess withholding.

• You avoid surprises at tax time by better matching payments with liability.

• You can prevent penalties for underpayment if your withholding is too low.
  Regular reviews of your withholding — especially after life changes like marriage, a new job, or additional income — help maintain financial stability.

Conclusion

Taking a few minutes to check your tax withholding in 2026 can pay off with more consistent paychecks and fewer surprises at tax time. By updating your W‑4 and reviewing your tax situation regularly, you can better match what’s withheld to what you actually owe, improving your financial planning and reducing stress throughout the year.