Posted on May 5, 2026
We expect to comment later this week on April/early May payments with individual income tax return filings, but first we will comment on tax withholding payments. In April, we observed some slippage in growth of federal tax withholding–that is, the amounts of income and payroll taxes that employers withhold from workers’ paychecks and remit to the Treasury Department as soon as the day after the workers are paid. Specifically, we estimate that tax withholding grew by 4.0 percent in April compared to the amounts from April 2025, measuring so-called year-over-year growth (see the chart below). That is consistent with an overall economy that is growing at a slow-to-moderate pace in real (inflation-adjusted) terms. Withholding growth in April was between the 5.4 percent averaged for the first quarter of 2026 and the 3 percent averaged in the last quarter of 2025. Growth in April was in line with that of wages and salaries in recent months through March as reported in the National Income and Product Accounts. (NIPA-measured growth in wages and salaries for April will be released late this month.) Note that withholding growth is adjusted to remove the tax effects of the 2025 reconciliation legislation that we estimate has reduced withholding growth by about 0.6 percentage points this year.
