IRS encourages taxpayers to check withholding now for next year

IR-2025-52, April 17, 2025

WASHINGTON — The Internal Revenue Service reminds taxpayers that proper tax withholding now is key to avoiding surprises when they file their tax return next year. Making any needed adjustments earlier in the year means taxpayers won’t have to make a big change later in the year to catch up.

The IRS Tax Withholding Estimator is a free online tool that helps workers, independent contractors and retirees determine if they are having the right amount of federal income tax withheld from their paychecks. Using it can prevent taxpayers from having an unexpectedly large tax bill or a substantial refund when they file in 2026.

Why use the Estimator?

Taxes are pay-as-you-go, which means that taxpayers need to pay their tax as they receive their income. They do this through withholding.

For employees, “withholding” refers to the federal income tax portion of each paycheck that an employer takes out for tax purposes. It can also mean the amount from earnings that self-employed people and others voluntarily set aside to pay their estimated taxes.

After using the Tax Withholding Estimator, taxpayers can determine if they need to submit an updated Form W-4, Employee’s Withholding Certificate, to their employer or adjust the amount they voluntarily set aside for tax purposes. By adjusting tax withholding, individuals can:

• Prevent owing money and potential penalties at tax time.
• Adjust withholdings to increase take-home pay instead of waiting for a refund.

Use the tool once a year

By using this tool once a year, taxpayers can manage their estimates based on any personal life change, such as buying a home, changing jobs, having a child or changing their marital status.

For individuals who recently completed their 2024 tax return, the IRS advises them to use the Tax Withholding Estimator that considers all income sources such as full-time wages, side jobs and any sale of services or commodities typically reported on Form 1099-K.

Required documents

For an effective tax withholding estimate, the IRS recommends taxpayers gather certain documents including:

• All income statements, including those of your spouse if filing jointly
• Data from other sources of earnings
• Their most recent income tax return

Publication 505, Tax Withholding and Estimated Tax, provides instructions for taxpayers with complex tax situations that are difficult to solve through the Tax Withholding Estimator. These cases may involve taxpayers responsible for the alternative minimum tax or other taxes and those with long-term capital gains or qualified dividends.

More information

For more information on the IRS Tax Withholding Estimator, review the Tax Withholding Estimator FAQs at IRS.gov.