OKLAHOMA CITY – Congress reached a compromise New Year’s Day to prevent America from going over the “fiscal cliff.”
The deal saved the middle class from a major tax hike.
However, one part of the deal that received much less media attention was the change to the Social Security Payroll Tax; it’s going up 2 percent.
Two years ago, Pres. Obama reduced the Social Security Payroll Tax from 6.2 percent to 4.2 percent.
The two year tax vacation is now over.
For the average American worker, earning $50,000 a year, the extra two percent means their take-home pay will be $1000 less for 2013.
“Both parties were comfortable letting that expire so now the tax rate goes back to 6.2 percent for the individual,” President of the Oklahoma Society of CPAs, Eric Johnson, said.
The Social Security Payroll Tax is capped at $113,700 for an individual.
“They really had to go back to that 6.2 percent to continue to fund the Social Security account,” Johnson said.
Employers have until Feb. 15 to correct employee paychecks.
They have until March 15 to correct any deduction errors.