The government reduction in Social Security payroll taxes (“tax holiday”) ended Dec. 31, 2012. The employee tax rate for Social Security will return to 6.2% from 4.2%, resulting in 2 percent less in after-tax pay beginning in the first January 2013 paycheck. This tax break was not extended in the Act passed by Congress on Jan. 1, 2013.

Estimated 2 percent increase for Social Security Payroll Taxes:

Yearly taxable
wages
Additional taxes
you will pay (by month)
Additional taxes
you will pay (by year)
$25,000 $42 $500
$50,000 $83 $1,000
$75,000 $125 $1,500
$100,000 $167 $2,000

Additional Medicare Tax On Wages Over $200,000

The current Medicare tax rate of 1.45% will continue continue for 2013, but an additional Medicare tax of .09% will be withheld on wages paid  to an employee in excess of $200,000 during the calendar year.

Federal Withholding Tax Rates

The Act maintains the current income tax rates for individuals earning up to $400,000 and families earning less than $450,000. The maximum marginal rate for employees making more than these amounts will now be 39.6% up from 35%.

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