VIDEO REPORT: Not Seeing Higher Income Taxes? Don't Celebrate Just Yet

By: Rachelle Baillon Email
By: Rachelle Baillon Email

Wednesday, January 2, 2013--6:15p.m.
MADISON-- The Social Security Payroll Tax holiday is expiring after two years--and Congress hasn't extended it--which means you'll be seeing more money come out of your paycheck this year.

Traditionally the payroll tax has been 6.2%. However, the last two years--during the tax holiday--the rate was lowered to 4.2%. That was as part of an effort to stimulate the economy and put more money into consumers' hands.

But now, that rate is returning to the traditional number at 6.2%

"As far as the tax itself, it will be taken out of your paycheck so it will be done for you, but part of your planning process may be to proactively calculate it for yourself and to put a plan together for where you go from here," said Debbie Oswald, a senior wealth manager for SVA Plumb Wealth Management. Oswald said the social security payroll tax is only applied to the first $113,700 of income--meaning it won't apply to amounts above that.

She said an easy way to figure out the amount of your income that will be affected by the rate hike is to take your total income and multiply it by two percent.

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