Expired Payroll Tax Cut Knocks Down Paychecks - WBOC-TV 16, Delmarvas News Leader, FOX 21 -

Expired Payroll Tax Cut Knocks Down Paychecks

Posted: Updated:

SALISBURY, Md.- The fiscal cliff may be behind us after a last minute deal was reached in Congress. However, that does not mean the majority of us escaped higher taxes. If you have gotten your first paycheck of 2013, you will notice less net pay. This all stems from an increase in the payroll tax.

For the past two years, we have all enjoyed a bit of a break, thanks to the government temporarily lowering the payroll tax rate. But that break is over, and that means lower paychecks for people already struggling here on Delmarva.

Mark Figgs said every day is a financial struggle. The father of a 5-month-old baby girl, he must pay child support to his estranged girlfriend, on top of other expenses. He is currently putting college on hold and living at home with his parents, trying to save money and hoping for a better future.

He said he was shocked when he saw his first paycheck of the new year.

"It was crazy, because I get paid $190 and only had $90 on my check to spend and that ain't enough to do anything with."

Mark told WBOC the lower paychecks are going to make life even tougher.

"It will mean I'm going to have find another job, even though there's not another job out there, because no one's hiring," he said. "I've just got to save the little money that I get left."

So, what gives? Tylor Claggett, professor of finance at Salisbury University, said the answer is simple.

"In a sense, we really had a break for two years and now we're just getting back to normal again," he explained. "The normal Social Security tax is 6.2 percent, it was dropped to 4.2 percent in response to the financial crisis and now its just been put back to 6.2 percent. So there's been a 2 percent in the deduction, and that's what people are seeing."

The payroll tax is used to fund Social Security. The rate increase means those earning $30,000 a year can expect to see about $50 less every month.

The Tax Policy Center estimates that 77 percent of American households will face higher federal taxes this year.

According to the Federal Reserve Bank of New York, Americans reported spending between 28 and 43 percent of the savings from the payroll tax cut over the past two years. The group predicts the average household making $50,000 a year will reduce spending by about $710 this year to make up for the rise in payroll taxes.

  • Most Popular StoriesMost Popular StoriesMore>>

  • UPDATED: Lewes Man Arrested for Kidnapping and Assault

    Lewes Man Wanted for Alleged Assault, Kidnapping

    07/19/2017 17:17:00 -04:002017-07-19 21:17:00 GMT
    Friday, July 21 2017 12:05 AM EDT2017-07-21 04:05:03 GMT
    Delaware State Police are searching for Michael H. Debarr of Lewes.Delaware State Police are searching for Michael H. Debarr of Lewes.
    UPDATED: Delaware State Police found and arrested the Lewes man wanted for kidnapping and assault from earlier this week on Thursday.More
    UPDATED: Delaware State Police found and arrested the Lewes man wanted for kidnapping and assault from earlier this week on Thursday.More
  • Ocean City Prepares For "College Beach Weekend"

    Ocean City Prepares For "College Beach Weekend"

    Thursday, July 20 2017 9:15 PM EDT2017-07-21 01:15:39 GMT
    Thursday, July 20 2017 9:15 PM EDT2017-07-21 01:15:39 GMT
    Ocean City Prepares For "College Beach Weekend"Ocean City Prepares For "College Beach Weekend"
    The town of Ocean City prepares for "College Beach Weekend". The three day event starts today and according to the events organizer, the town is expected to see an influx of about 40,000 college students.More
    The town of Ocean City prepares for "College Beach Weekend". The three day event starts today and according to the events organizer, the town is expected to see an influx of about 40,000 college students.More
  • People of Cambridge Remember H. Rap Brown

    People of Cambridge Remember H. Rap Brown

    Thursday, July 20 2017 6:39 PM EDT2017-07-20 22:39:06 GMT
    Thursday, July 20 2017 6:39 PM EDT2017-07-20 22:39:06 GMT
    "The streets are yours. Take 'em." Those were the words that came from H. Rap Brown - a 1960s civil rights activist.More
    "The streets are yours. Take 'em." Those were the words that came from H. Rap Brown - a 1960s civil rights activist.More
Powered by Frankly

All content © Copyright 2000 - 2017 WBOC. All Rights Reserved. For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices