Scott Bessent is urging Americans to adjust their tax withholdings to boost take-home pay in 2026, but financial planners and tax professionals caution that the strategy could lead to costly surprises when filing returns next year, highlighting tensions between short-term cash flow gains and long-term tax accuracy.
Speaking at a White House press briefing, Bessent framed the current filing season as favorable for taxpayers and encouraged workers to reconsider how much federal tax is deducted from their paychecks. "It's been a great tax season," he said, adding, "I want to encourage everyone out there watching today to change their withholding if they haven't already done so." He argued that reducing withholding could function as an immediate income boost, stating, "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."
The recommendation comes as Internal Revenue Service data shows a notable increase in refunds. As of April 10, the average refund rose 11.2% to $3,397, up from $3,055 a year earlier, based on 114 million filed returns out of an expected 164 million ahead of the April 15 deadline.
At the center of the debate is the Form W-4, which employees use to determine withholding levels. Adjustments can increase immediate take-home pay, but experts stress that withholding is only an estimate of annual tax liability. Certified financial planner John Nowak described paycheck withholdings as "simply estimates," underscoring the inherent risk in miscalculating.
Tax professionals warn that lowering withholding without a clear understanding of one's full-year tax picture can backfire. Nowak cautioned that mistakes could carry "negative consequences," including underpayment penalties or unexpected tax bills. He advised against making "haphazard changes," instead recommending the use of official tools such as the IRS withholding calculator to refine estimates.
Online reactions to Bessent's comments reflect a broader skepticism among taxpayers navigating increasingly complex tax rules. One user wrote, "Screw this! I withhold MORE than the IRS calculator says I should, claim 0, and STILL have to pay in each year," while another with decades of payroll experience warned, "DO NOT DO THIS. Adjust so you come out even. DO NOT go in and change s**t so you get more on your check. You'll be pissed next tax season if you do."
The debate unfolds amid broader changes to the U.S. tax code tied to policies backed by Donald Trump. Treasury Department data indicates that more than 53 million taxpayers have claimed at least one of the administration's new tax provisions, including deductions related to overtime income, tips, auto loan interest and Social Security benefits.
Key changes shaping taxpayer behavior include:
- Expansion of the SALT (state and local tax) deduction cap to $40,000 from $10,000
- Increased use of itemized deductions among higher-income households
- Growing reliance on refunds to manage personal debt, with nearly 23% of taxpayers planning to use refunds to pay down credit cards, according to a CNBC survey
For policymakers, the push to adjust withholding aligns with efforts to address voter concerns about inflation, energy costs and economic uncertainty. For households, however, the decision carries trade-offs between liquidity and compliance risk.
