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How Payroll Tax Holiday Expiration Affects Your Paycheck

11:16 PM, Jan 15, 2013   |    comments
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FAIRFAX, Va. (WUSA) - Most people got their first pay check of 2013 on Friday and if you're like me, you probably went "Whoa! Why the pay cut?"
Well, you've got Congress and the President to thank for that.
The payroll tax holiday expired on January 1 and it wasn't extended in the fiscal cliff negotiations.

So what does this mean for your pay check?

This is not the result of a tax increase.
This is the result of a temporary tax cut expiring.
And what that payroll tax holiday did was it cut two percentage points from every American's Social Security payroll tax.
It's been in effect for two years.
But now -- it's gone.
And you better believe... it is not going unnoticed.

The Tax Policy Center has a calculator that lets you break down what these changes will mean for you.

So let's say you're married with two children under the age of 13 and your income level is right down the middle, just over $75,000.
What you find is that your total payroll tax liability is now almost $10,700. Before the tax holiday expired, it was just about $9300.
That's a difference of $1,396, which breaks down to about $54 every paycheck if you get paid every other week.

Let's try this again, but this time, you're single, you make a slightly higher-than-normal income, $46,000.
In this case, your payroll tax liability is now $6600. Befor,  it was just $5700.
That's a difference of $864, which breaks down to about $33 every bi-weekly paycheck.

Big picture: this payroll tax holiday was bound to disappear eventually.
Problem is, it expired at a time when unemployment is high, growth is slow, and  in their pay checks.

  By Kristin Fisher. 9News, WUSA9.com

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