The tax package that was passed in December included a temporary reduction in the Social Security deductions from workers paycheck by 2 %.
“It’s a nice little bump,” said Don Williamson, senior tax manager at Santa Rosa accounting firm Zainer Rinehart Clarke.
The tax benefit—about $104 a month for the typical family of a medium household income of $62,000 should appear on the first paycheck of the New Year for most workers. Most families will see additional $1245 take-home cash in their paychecks this year.
“The employee doesn’t have to do anything,” Williamson said. “Although people should look at their paycheck to make sure their employer made the adjustment.”
In an effort to stimulate the economy, this tax break will help by giving people more disposable income.
In Summary, Social Security is a payroll tax that deducts a total of 6.2% of an employee’s wages and the employer matches it by paying in an additional 6.2%, for a total contribution of 12.4%. NOW, individuals will only pay in 4.2% and the employer will remain contributing 6.2%.
This is only a one-year program and will not affect some federal employees hired before 1984 do not pay into the Social Security Program.
“Theoretically people will have more disposable income, so they can spend more on retail or other services,” said Ben Stone, director of the county Economic Development Board. “But it’s hard to know exactly what will happen. People have different schools of thought on it.”
