Feds see paychecks shrink with payroll tax hike

Bruce Rolff/Shutterstock.com

Federal employees will see less money in their first 2013 paycheck because of the end of the payroll tax holiday.

The payroll tax holiday officially expired on Jan.1, and Congress did not renew it as part of the final compromise on the fiscal cliff. The government reduced the payroll tax funding Social Security for individuals from a rate of 6.2 percent to 4.2 percent in 2010 and 2011 to help stimulate the economy. For individuals, the rate has now reverted to 6.2 percent of annual wages up to $113,700, which means most Americans will see their paychecks shrink this year. Employers and individuals each pay 6.2 percent, with the combined 12.4 percent going to finance Social Security.

Feds will see less money for the wages they receive for the pay period ending Dec. 29, 2012. The official pay date for that pay period is Jan. 4.

The change could come as a surprise to some feds who were expecting to see the increase later this month. Individuals earning $50,000 per year will see their monthly paycheck decrease by $83 and will take home $996 less annually. Those earning $100,000 annually will see $167 less in their monthly pay, and $2,004 less for the year.

Federal civilian employees can find the change on their leave and earnings statement under the OASDI (Old Age, Survivors, and Disability Insurance) category. Military personnel should look under the FICA (Federal Insurance Contributions Act) category for Social Security withholdings.

Increases in allowances, pay raises and promotions could affect service members’ net pay, according to a Jan. 4 report from the American Forces Press Service. “Service members could see an increase in net pay or a decrease,” military personnel and readiness officials told AFPS. Active duty personnel will see adjustments in their mid-January paycheck, AFPS reported.

For civilian employees, the change likely means less money overall, particularly in light of the continued pay freeze. President Obama issued an executive order lifting the pay freeze on March 27, but there’s no guarantee Congress will let that happen.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download

When you download a report, your information may be shared with the underwriters of that document.