Social Security Tax Cut Means A Cut From Your Paycheck
MINNEAPOLIS (WCCO) — Lots of people might be surprised when they open their first paycheck of the year. The end of the 2-year break on social security payroll taxes means we’re all going to have to pay a little more to Uncle Sam.
Lawmakers did finally make a deal to avoid going over the so-called Fiscal Cliff, but it did come with some consequences.
The deal ends a 2 percent tax cut on Social Security which means we’ll all see our paychecks get a little bit smaller.
If you make $50,000 a year, you’ll see about $1,000 come out of your paycheck each year. If you make $75,000, you’ll lose about 1,500 every year.
If you’re living paycheck to paycheck, that 2 percent cut is going to create a dent in your wallet.
“It will be a big cut and my son is planning on going to college so it’s going to be hard,” said Herlonda Williams.
Some people we talked with say they’re going to start doing more of their shopping at discount stores like Wal-Mart and Aldi.
“We’re probably going to be cutting back a little more, which is a little challenging, because we’re always on a budget,” said Heather Fulk.
Others are looking at their budgets and cutting out the extras.
“I’m going to write a budget for the first time, I’m going to cut back on eating out and stuff like that,” added Ryan, a Minneapolis resident.
However, not everyone WCCO-TV talked with had their mind on their money.
“It’s a meaningless number, 2 percent. How is that going to affect anybody? If they can’t afford two percent, they’re not making any money to start with,” said Robert Buseth.
The lower payroll rate was costing the government $120 billion in tax revenue each year.
Sonya Goins, Producer