‘Why is my paycheck suddenly smaller?!’
Prepare yourself and the Payroll department for the complaints now.
Reason: Congress let the temporary Social Security payroll-tax cut expire – which means employees’ payroll tax rate will (once again) be 6.2%, up from 4.2%.
Employees who followed the fiscal cliff drama know this. But the majority, who don’t have a clue what FICA stands for, won’t.
All they’ll notice is that their paychecks are smaller. In fact, the Tax Policy Center reports that employees making between $30,000 and $200,000 a year in salary will be hit harder than those earning more than $200K.
Workers in the $30K-200K range will see their paychecks shrink by as high as 1.7%, as much as $1,784 annually.
Head off their complaints now
Your best bet: Let employees know about the change now.
Consider sending an email about the SS tax change. Let employees know that federal law requires the company deduct 2% more for Social Security taxes.
You can also link this Wall Street Journal calculator that shows how much more you’ll pay based on your salary. As an example, a household that earns $50,000 a year in salary (pre-tax) will pay $1,000 more in taxes in 2013.
- Share on
Free Training & Resources
White Papers
Provided by Anaplan
White Papers
Provided by UJET
Further Reading
Influential people who have positive attitudes can help others around them think more positively. The opposite is also true. Negative pe...
With a new year comes new state laws with compliance challenges that could disrupt business as usual. In addition to the minimum wage hi...
IRS has given employers two extra years to implement a Secure 2.0 Act provision that’s bringing tax changes for certain retirement pl...
Some payroll staffers may assume that complying with IRS regulations is enough to keep their companies out of trouble. That’s not ...
The IRS has finalized the tax year 2026 Form W-2, solidifying more of the reporting requirements established by federal legislation passed ...
IRS told one employer that payments made to employees under its fixed-indemnity health insurance policy were subject to federal income, FIC...
