Tool | January 2013
What Failure to Extend the Payroll Tax Holiday Will Cost You
Use this simple calculator to see how much your paychecks will drop starting in January because Congress decided to let the payroll tax holiday expire on schedule at the end of 2012. The end of the holiday means the employee share of the payroll tax that pays for Social Security reverts to 6.2% for 2013. For the past two years, the rate was cut to 4.2% in an effort to stimulate the economy.
For 2013, the Social Security wage base - the maximum amount of wage or self-employment income to which the Social Security payroll tax applies - is $113,700.
For details, read the related article Protect Your Paycheck.
2. How much of it do you contribute to flexible spending accounts (?) The part of your salary contributed to flex plans to reimburse child care and medical expenses escapes the payroll tax as well as the income tax. Since it's not taxed in the first place, this part of your salary won't be affected by a 2 percentage point increase in the payroll tax.