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.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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