On Jan. 1, 2013, Congress passed the American Taxpayer Relief Act of 2012 (H.R. 8), signed into law the following day. The legislation does no include an extension of the 2 percent payroll tax cut of the Social Security (FICA) employee tax on the first $113,700 of wages. The employee-paid portion of the Social Security FICA tax increased on all wage earners from 4.2 percent to 6.2 percent beginning Jan. 1, 2013. The portion of the tax paid by employers remained at 6.2 percent of employee wages, for a total Social Security FICA tax of 12.4 percent. The Internal Revenue Service issued new tax withholding tables for employers.
When members of Congress worked out a deal to avert the fiscal cliff, they did not extend the reduction to the Social Security Tax. As of Jan. 1, that tax increased from 4.2 percent to 6.2 percent. It is an increase you'll notice in your paycheck. If your family earns $50,000 a year, you will see an extra $1,000 deducted this year. That comes to an extra $40 a paycheck.
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