‘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
Webinars
Provided by Insightsoftware
Further Reading
IRS announced new per diem rates for business travel, effective October 1, 2024. Employers can use these rates through September 30, 2025. ...
The Secure 2.0 Act of 2022 brought big retirement plan changes. But in spots, the wording wasn’t clear, leading to uncertainty among ...
In 2022 about a dozen states put law changes – some at the constitutional level – directly into the hands of the voters on Elec...
Paying six-figure salaries to relatives of the owners or top executives of a company is never a good look. For a publicly traded company, f...
A federal court found a worker had been misclassified and identified more than 800 hours of potential overtime. But the Fifth Circuit still...
Hospitality employers in California take note: Several cities in The Golden State have minimum wage increases for hotel employees soon taki...
