January Paychecks Will Reflect Tax Increase.
The politicians in Washington DC have yet to decide what income taxes will be in January 2013, but payroll departments have no choice but to behave in a professional manner.
As a result, we wanted to let you know that as of Jan 1, 2013, all payroll checks will reflect an increase in the employee’s portion of social security tax from 4.2% to 6.2%. Payroll professionals are anticipating that the 2% reduction in the employee’s share of social security taxes will not be extended after it’s expiration date of Dec. 31, 2012.
As a result, all payroll checks produced beginning Jan 1, 2013 will reflect a reduction in net pay. Employers need to notify their employees of this development as they most likely will notice this reduction in their take home pay. If you would like a notice to post for employees, please visit our web site at this link for a printable notice.
Keep in mind this 6.2% rate is the normal social security tax rate that had been in place for many years prior to the rate reduction that took place in the middle of 2011 as part of a government economic stimulus program.
Note that withholding taxes will continue to be calculated using the 2012 IRS withholding tables until the IRS notifies the public of the new rates based on a final settlement achieved in Washington, which will hopefully happen sooner than later.
Happy New Year!