Treasury Secretary Urges Workers to Adjust Paycheck Withholding, But Experts Warn of Potential Tax Bills

Mistakes in updating withholdings could lead to unexpected tax bills next season, according to financial advisors.

Apr. 17, 2026 at 12:52pm

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An extreme close-up of various gears, levers, and mechanisms of a banking machine, conveying the intricate and powerful nature of financial systems without using any literal currency or charts.As workers consider adjusting their paycheck withholdings, a close examination of the complex financial machinery behind tax payments reveals the importance of getting the details right.Today in Orlando

Treasury Secretary Scott Bessent has encouraged workers to update their paycheck withholding for 2026, saying it could lead to a 'real wage increase' and allow people to 'keep more of their money.' However, tax experts have cautioned that making changes to withholding can be tricky, and mistakes could result in taxes owed for 2026. The IRS didn't update withholding tables for employers after recent tax law changes, leading to higher refunds this year, but blanket suggestions to change withholdings could have 'negative consequences' next tax season.

Why it matters

Updating paycheck withholding is an important financial decision that can impact how much tax is paid throughout the year and the size of tax refunds. With recent tax law changes, getting the withholding amount right is critical to avoid unexpected tax bills or overpayments. This story highlights the need for taxpayers to carefully consider any changes to withholding based on their specific financial situation.

The details

Treasury Secretary Scott Bessent urged workers to update their paycheck withholding for 2026, saying it could lead to a 'real wage increase' and allow people to 'keep more of their money.' However, tax experts have warned that making changes to withholding can be tricky, and mistakes could result in taxes owed for 2026. The IRS didn't update withholding tables for employers after recent tax law changes, leading to higher refunds this year, but blanket suggestions to change withholdings could have 'negative consequences' next tax season. Experts recommend using the IRS tax withholding estimator to determine the appropriate withholding amount based on factors like income, marital status, and dependents.

  • In 2025, new tax deductions were enacted for tip income, overtime earnings, seniors, and auto loan interest.
  • As of April 3, 2026, the average tax refund amount for individual filers was $3,462, up from $3,116 the previous year.

The players

Scott Bessent

The Treasury Secretary who urged workers to update their paycheck withholding for 2026.

John Nowak

A certified financial planner and certified public accountant who warned that making 'haphazard changes' to withholding could have 'negative consequences' during next year's tax filing season.

Tommy Lucas

A certified financial planner at Moisand Fitzgerald Tamayo in Orlando, Florida, who suggested reviewing the 'total tax' on the previous year's tax return as a 'quick calculation' to check 2026 paycheck withholding.

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What they’re saying

“I want to encourage everyone out there watching today to change their withholding if they haven't already done so. If you change your withholding, then you will get an automatic real wage increase ... on a weekly or a monthly basis, and you will be able to keep more of your money this calendar year.”

— Scott Bessent, Treasury Secretary

“If you change your withholding, then you will get an automatic real wage increase ... on a weekly or a monthly basis, and you will be able to keep more of your money this calendar year.”

— Scott Bessent, Treasury Secretary

“Paycheck withholdings are 'simply estimates' of the year's total taxes.”

— John Nowak, Certified Financial Planner and Certified Public Accountant

“Rather than making 'haphazard changes,' consider using the free IRS tax withholding estimator, which provides estimates and an updated Form W-4 for your employer.”

— John Nowak, Certified Financial Planner and Certified Public Accountant

“If your 2026 earnings and tax situation are the same as 2025, your total federal liability should also be similar. That means you can divide your 2025 total tax by the number of pay periods for 2026 and compare that number to your federal tax withholding for each paycheck.”

— Tommy Lucas, Certified Financial Planner

What’s next

If your 2026 earnings and tax situation are not the same as 2025, you may need to adjust your paycheck withholdings for the rest of the year or make a payment of any shortfall directly to the IRS.

The takeaway

Updating paycheck withholding is an important financial decision that requires careful consideration to avoid unexpected tax bills or overpayments. While the Treasury Secretary has encouraged workers to make changes, tax experts caution that mistakes could lead to negative consequences next tax season. Taxpayers should use the IRS withholding estimator and review their previous year's tax return to determine the appropriate withholding amount for their specific financial situation.