Help Paying Holiday Bills
As a result of the new tax law, most Americans will see their paychecks increase in January -- just in time to pay off Christmas credit-card purchases.
If you need extra cash to pay off Christmas bills, you'll get some help soon from the new tax law signed by President Obama on December 17. The law, which extends Bush-era tax cuts, reduces the payroll tax that funds Social Security by two percentage points. So that means most Americans will start seeing bigger paychecks in January.
The FICA tax, as it is called, will drop from 6.2% to 4.2% for most workers (and from 12.4% to 10.4% for the self-employed). The tax applies to up to $106,800 of income in 2011, so someone earning that much could see his payroll tax reduced by $2,136 in 2011.
To see how much your paycheck will rise in 2011 as a result of the tax cut, use our calculator. And if you got a tax refund this past spring, you might be able to increase your paycheck even more by adjusting your withholding. Our easy-to-use tax withholding calculator will help you avoid having too much taken from your paycheck next year.