If you are an employee or if you are self employed, the 2% reduction of Social Security tax is phased out at the end of 2012 and it is doubtful that it will be reinstated. What does this mean to you. For every $100 that you earn from wages or self employment your tax will increase by $2.00. So, for example if your gross earnings before withholding is $1,500 for your first paycheck in 2013 your net pay will be $30.00 less than the same paycheck in 2012.
Here is a chart:
Wages More Tax
$30,000 $ 600
$40,000 $ 800
$50,000 $1,000
$80,000 $1,600
$100,000 $2,000
Here is more information from an Associated Press article:
Report: Employee payroll tax reduction likely to go away as Social Security takes hit'
(AP) -- The AP reports that "come January, 163 million U.S. workers can expect to feel the pinch" of a return to a 6.2% Social Security tax rate for employees, "regardless of who wins the election." The end to the temporary reduction in Social Security payroll taxes "will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500," the story notes. The Social Security payroll tax break for employees was offered by President Obama two years ago, but now "politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security."
