For 2008 our twins turned 23. So that means not longer dependents.
I know I am going to get hit hard but how much?

What are our best options to lessen the impact this filing year?

I didn't change my W4 fed withholding until October (major oops).
I changed my W4 fed withholding 0 online calculators say I should also have $138 additional held.

Is it best to have most held out via withholding, or begin depositing the withholding shortfall into a savings tool for next year?

The impact depends on your income level and filing status. But this may help - each dependent is worth $3500 deduction from your income, so if you have two fewer dependens your Adjusted Gross Income will be $6,800 higher. This assumes that your income is less than $159,500 - if above that then the deductions aren't worth as much. Here's an example - if you are in the 25% bracket (married filing jointly with AGI > $65.1K and < $131K) the loss of two dependents will increase your taxes by $1750.

Since you have changed your W4 to reflect two fewer dependents, you should be OK. If you have other income besides your salary that is generating additional taxes (interest, capital gains, dividends, etc), you may want to boost the withholding, or alternatively consider filig quarterly estimated taxes. Filing estimated taxes gives you a bit more control. But requires discipline to make sure you remember to file each quarter on time and have the cash to do so.

Thanks. Hopefully only an additional $1750 will be needed. I'm prepared for that. If it's anything more... Uh oh!
We are $65.1K<AGI<$131K.