‘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.
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