Social Security Tax Rate Expected To Increase
PITTSBURGH (KDKA) — It doesn’t matter who’s elected president – federal payroll taxes to fund Social Security are going up on January 1st.
Most people don’t seem aware of it.
“No. I’m not,” says Sandy Lee of Prospect, “and I just saw my accountant on Tuesday and I wonder why he didn’t tell me that.”
It’s basically the end of a payroll tax holiday in 2011 and 2012 that pumped dollars into everyone’s pay check to help Americans during the great recession.
Eric Tomaszewski of Dorseyville has no doubt it will affect him.
“Of course it will — $1,000 — $2,000 out of my pocket.”
How it affects you depends on how much money you earn.
The Social Security tax rate will jump from 4.2 percent to its original rate of 6.2 percent for everyone.
For those making around $50,000, get ready to see a thousand dollars taken out of your 2013 paycheck, around $20 a week.
For those who make $100,000, it’s about $2,000 a year in higher taxes — or $40 a week.
And those dollars will be missed by middle class families.
“In this economy, it’s absolutely important. It’s going to hurt,” says Lee.
University of Pittsburgh economist Dr. James Maloy says taking $95 billion a year from our pockets for Social Security helps Social Security, but hurts the economic recovery.
“I used to have this extra money every month. Now this money isn’t there anymore,” he told KDKA Money Editor Jon Delano.
From cars to restaurants, having less money to spend will hurt some businesses.
“Do I go to this restaurant? Do I not go to this restaurant? Do I go to this bar? Do I not go to this bar?”
If you feel strongly about extending the payroll tax holiday, call your member of Congress.
Right now both Republican and Democratic leaders seem to favor letting it expire at the end of this year, but it’s election year so it’s a good time to call politicians.