Why Your Paycheck Might Be Different in 2013

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The first paycheck of 2013 may have more money taken out than the last paycheck of 2012. Here’s why:

SOCIAL SECURITY TAX For the past two years, employees received a break on the amount they were paying into Social Security, which was reduced from 6.2% to 4.2% for 2011 and 2012. Congress did not act to extend this payroll tax relief, so most employees will see a reduction in their take-home pay in 2013 as the rate reverts to the original 6.2%. Additionally, the social security taxable wage base will increase to $113,700 for 2013.

MEDICARE TAX INCREASE FOR HIGH EARNERS Most employees will see no change to their Medicare withholdings. The Medicare rate will remain at a flat 1.45% for 2013. Employees earning over $200,000 will be subject to an additional Medicare tax of 0.9% beginning in 2013. For these individuals, the Medicare tax rate will be 1.45% on wages up to $200,000 and 2.35% for wages exceeding $200,000.

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