Payroll Taxes to Go Up in 2013

Last updated on October 23, 2012

With the season hot in politics, the issue of taxes may have taken a backseat. But when the issue is paying more taxes arises, discussion becomes essential, and needless to say, highly volatile. Bad news is that payroll tax cut is coming to an end this year. Beginning 2013, workers will need to pay more taxes to the government.

Because the news is bad for any taxpayer who is affected by it, politicos from the Republicans and the Democrats are choosing to remain silent, non-committal, on the issue. The cut is expiring at a bad time for the politicians.

Social security is paid by both employers and employees in equal cuts. 50% is paid by employers and 50% is paid by employees. For the years 2011 and 2012, the share paid by employees was reduced from 6.2% to 4.2%. That means that a worker earning $50,000 per year saves $1000 annually.

The cut in payroll taxes was for 2011 and 2012, and can be extended. But because the government is not seeing it benefit the economy as they had expected it to, there is little likelihood of the cut being extended.

With the elections round the corner, no party is committing to the cut being extended or not. Democrats are showing more willingness to defend the tax cut, but at the same time they are not committing to extend it.

People realize that payroll tax cut was temporary, but it hurts to go back to paying more taxes. With the economy in trouble, an average worker will have a hard time getting lesser pay.