Social Security Payroll Taxes Return to 2010 Level

In 2010, Congress lowered the Social Security payroll tax in an effort to stimulate the economy. That reduction in the SS payroll tax expired on Dec. 31, 2012, and thus the FICA (payroll) tax has now returned to the level it was at prior to Congress’s intervention.  Folks: This is NOT a tax increase! Before 2010, employers withheld 7.65 percent of employees’ paychecks to fund Social Security and Medicare. Social Security receives 6.2 percent of the withholdings, and Medicare receives 1.45 percent. When Congress was trying to stimulate the economy in 2010, they lowered the Social Security tax to 4.2% so people would have larger take-home checks and thus spend more.  Repeat: this is NOT a tax increase, it is simply terminating the temporary tax cut. While the tax cut may have helped stimulate the economy, it worsened the long term projections for Social Security. You can’t have your cake and eat it, too.