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Newly released 2026 Form W-4: What you need to know

The IRS has released the new form, which contains updates that align withholding with new deduction and credit provisions under the One Big Beautiful Bill Act (OBBBA).  The new form is now 5 pages (was 4 in 2025).

The finalized form expands the Deductions Worksheet, clarifies exemption procedures, and adjusts credit values to reflect the updated Child Tax Credit of $2,200 per qualifying child, up from $2,000. 

What changed?

  • Adjustment of Child Tax Credit Values

    Step 3: Claim Dependent and Other Credits.  The new W4 adjusts credit values to reflect the updated Child Tax Credit of $2,200 per qualifying child, up from $2,000. Lines 3(a) and 3(b) remain separate for qualifying children and other dependents. The $500 credit for other dependents is unchanged.

  • Clarification of Exemption Procedure

    Step 4: Other Adjustments. The optional label has been removed. Step 4 now clearly defines its subsections. Step 4(b) explicitly states that if left blank, withholding defaults to the standard deduction. Exemption checkbox added: Employees can now claim exempt from withholding via a formal checkbox and certification, replacing the old handwritten “Exempt” notation.

  • Expanded Deductions Worksheet

    The expanded deduction worksheet is now an entire page and includes new categories introduced by OBBBA: 

  • Qualified Tips

If your total income is less than $150,000 ($300,000 if married filing jointly), enter an estimate of your qualified tips up to $25,000.

  • Qualified Overtime Compensation

If your total income is less than $150,000 ($300,000 if married filing jointly), enter an estimate of your qualified overtime compensation up to $12,500 ($25,000 if married filing jointly) of the “and-a-half” portion of time-and-a-half compensation.

  • Qualified Passenger Loan Vehicle Interest

Qualified passenger vehicle loan interest. If your total income is less than $100,000 ($200,000 if married filing jointly), enter an estimate of your qualified passenger vehicle loan interest up to $10,000.

What employers need to do:

  • Make sure you have appropriate earnings codes set up to track overtime and tips.
  • Update HRIS/payroll fields to accommodate the expanded Step 4(b) deductions and new exempt checkbox.
  • Refresh employee guidance to explain the new lines.
  • Validate withholding logic against 2026 tax tables once released.
  • Communicate early—especially to employees with tips, overtime, or auto-loan interest deductions
  • Remind employees that the IRS withholding estimator remains the best way to validate accuracy throughout the year.

Reach out to support if you have questions, need additional earning codes on your time entry grid, or need to make any other adjustments.

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