Payroll Withholding Changes

As you know Congress passed the American Taxpayer Relief Act of 2012 to avoid the Fiscal Cliff and some are wondering how this may affect your paycheck.  Unfortunately, many of us will not see much of the 3% pay increase translate to our net pay for the following reasons:

The most significant change that will affect your net pay is the employee share of Social Security reverts back to 6.2% from the 4.2% we were paying in 2012.  So, you will see the amount withheld from your paycheck for Social Security increase.  As an example, if your income for the pay period subject to Social Security tax is $1,000, last year you would have had $42 withheld from your check.  This year if your income subject to SS tax is $1,000 you will have $62 withheld from your check.

Because of the 3% pay increase you will probably see a slight increase in your state and federal income tax withholding as well.  The amount withheld for the employee contribution to the retirement system will also increase due to the 3% raise.

Sorry for the unpleasant news.

John Rahhal
Senior Accountant
Business Office
Metropolitan Library System
300 Park Ave.
Oklahoma City, OK 73102
Ph. 405-606-3794
Fax 405-606-3799
E-mail: [email protected]