ASHWAUBENON – Your next paycheck may be a little bigger. Starting April 1, the state is reducing the amount of money it takes out of paychecks for income taxes. But the change is also likely to have an impact on your 2014 state refund.
A change to the state’s tax withholding tables means more money in your wallet now. But you could be reaching for your wallet at the end of the year.
According to the state, a typical working family of four will get about $58 more in their paychecks each month starting in April. It would mean $520 more this year.
Republican Governor Scott Walker directed the state to make the change. It’s the first adjustment to withholding levels since 2009.
“Income taxes have gone down for anyone who pays taxes in the state. Because of that, we don’t have to take as much out of withholding anymore,” said Gov. Scott Walker on Monday.
This change is separate from the income and property tax rate cuts Governor Walker signed into law earlier this week.
The withholding changes aren’t a tax cut, and the state doesn’t lose money in the long-term. But the state’s Legislative Fiscal Bureau says the adjustment will cause more taxpayers to owe money when they file their tax returns.
A FOX 11 Fact Check found about 336,000 taxpayers in Wisconsin had to pay the state in 2012. About 2.4 million people did not.
The state says this change will have an impact on those numbers, but it couldn’t say what the impact would be.
Democratic State Representative Cory Mason of Racine opposes modifying the withholding tables.
“It might seem like a good thing now, before the election, before people realize the consequences of it, but when people go to pay their taxes, they’re going to find out that this is a gimmick,” said Mason in a phone interview.
Dean Listle of Secure Retirement Solutions supports the change, but has a word of caution for taxpayers.
“Understand that this really isn’t a raise. We look at it as potentially a raise, $58 more per month,” said Listle, a retirement income planner.
He hopes people plan and figure out if they’ll need the money when tax time rolls around.
“Use that money, $58, and put it away. Put it in a savings account, use it to pay down debt,” said Listle.
Click the following links to compare the old withholding to the new withholding for your family and income level.