It’s Your Money: Why Not Get Your Tax Withholding Right?

The IRS issued about 95 million federal income tax refunds by May 12, 2023 (for tax year 2022), averaging $2,812.1 You might consider this type of windfall a stroke of good fortune, but is it really? You probably wouldn’t pay someone $234 each month to receive $2,812 back at the end of a year. But that’s essentially what a tax refund is — the repayment of your interest-free loan to the government.



If you received a large refund on your 2022 return, consider reducing your federal income tax withholding, which would leave you with a bigger paycheck. Taking home more of your pay may let you put that money to better use. For example, you may be able to pay off credit-card debt sooner, build up your emergency savings, or contribute more to a retirement account. If your tax bill was higher than you expected and you had to scramble for the money to pay it, bumping up your withholding might help you avoid a similar situation next April.

In any case, it’s a good idea to check your withholding periodically. This is particularly important when something changes in your life; for example, if you move, get married, divorce, or have a child; you or your spouse change jobs; or your financial situation changes significantly. The IRS has an online tool (the Tax Withholding Estimator) that can help you determine whether — and how much — to adjust your withholding.


Federal Tax Brackets for 2023

Marginal tax rate: Single taxpayers: 10%: Income up to $11,000, 12%: $11,001 to $44,725, 22%: $44,726 to $95,375, 24%: $95,376 to $182,100, 32%: $182,101 to $231,250, 35%: $231,251 to $578,125, 37%: income over $578,125. Married couples filing jointly: 10%: income up to $22,000; 12%: $22,001 to $89,450; 22%: $89,451 to $190,750; 24%: $190,751 to $364,200; 32%: $364,201 to $462,500; 35%: $462,501 to $693,750; income over $693,750.


The amount of federal income tax withheld from each paycheck is based on the information on your W-4 Form, which may have been filled out a long time ago. If you decide to make an adjustment, you will need to complete a new W-4 and submit it to your employer.

Local firms are sales offices of Massachusetts Mutual Life Insurance Company (MassMutual), and are not subsidiaries of MassMutual or its affiliated companies. Jeffrey A. Moll is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC.  Member SIPC.  Supervisory Office 2650 Warrenville Rd, Suite 100, Downers Grove, IL 60515 Phone: 630-441-1000. Jeffrey A. Moll is licensed to sell insurance and securities in the following jurisdictions: IL, WI, IA, FL, AZ, TX, MN, NM, NY, DC, MD, KS, IN, OH, GA, VA, MI, WA, AR, CA Jeffrey A. Moll  Arkansas Insurance License #: #302655, California Insurance License #: #OE85044, Dean Mansavage California Insurance License #: #OH06317, Arkansas  Insurance License #:  #423795 CRN202506-2519571

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