Payroll Tax Holiday Expires. See How Much You’ll Pay Now

By Jim Donovan 

I hate to break it to you, but the holiday is over and I’m not talking about New Years.  I’m talking about the “Payroll Tax Holiday” and now it’s time to pay up.

You may not remember this, but two years ago in the midst of the “Great Recession” Congress lowered the amount we pay as a Social Security payroll tax.  That tax dropped from 6.2% down to 4.2%.  

Originally this “tax holiday” was supposed to last for one year and was intended to help stimulate the economy.  It then was extended for an additional year.   But now it’s time to pay the piper.  The fiscal cliff deal reached by the White House and Congress last night did not extend the lower rate for a third time.

So as of yesterday, you’ll now pay 6.2% of your income (up to $113,700) in the form of a payroll tax.

What does this mean to your wallet?  I did the math for you:  

 Income:            Was 4.2%        Now 6.2%      Difference         Bi-Wkly

 $20,000           $840                $1240              $400                $15

$30,000           $1260              $1860              $600                $23

$40,000           $1680              $2480              $800                $31

$50,000           $2100              $3100              $1000              $38

$60,000           $2520              $3720              $1200              $46

$70,000           $2940              $4340              $1400              $54

$80,000           $3360              $4960              $1600              $62

$90,000           $3780              $5580              $1800              $69

$100,000         $4200              $6200              $2000              $77

$110,000         $4620              $6820              $2200              $85

$113,700         $4775              $7049              $2274              $87

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