The IRS released a draft version of the 2026 Form W-4, Employee’s Withholding Certificate, with changes due to the One Big Beautiful Bill Act (OBBBA). The early release draft is provided for information only.
The draft 2026 Form W-4 increases to five pages. Changes include:
Step 3: Claim Dependent and Other Credits. The lines in Step 3 are now labeled Lines (a) and (b) and require the same information as in the 2025 form. The amount for the child tax credit is blanked out, which is increased by the OBBBA to $2,200 from $2,000 per qualifying child.
Step 4: Other Adjustments. Step 4 no longer includes “Optional.” Step 4(b) informs employees that if the employee skips this line, withholding will be based on the standard deduction.
Deductions Worksheet. The worksheet for Step 4(b) now has 15 lines and is on its own page. Among the new lines are ones to account for the “no tax on overtime” and “no tax on tips” provisions.
Exempt checkbox. A checkbox was added after Step 4 for employees to claim they are exempt from withholding. On the previous version, employees claimed exempt by writing “Exempt” in the space below Step 4(c).
The OBBBA contains many provisions that will affect payroll for years to come. Many questions remain on how to handle provisions from the bill.
Register for PayrollOrg’s “Key OBBBA Payroll Impacts for 2025 and Beyond” on-demand webinar to learn how OBBBA provisions will impact payroll. The on-demand webinar includes a handout that provides answers to attendees’ questions asked during the live webinar.
Rayna Alexander, Esq., is Editor of Payroll Information Resources for PayrollOrg.