The Expired Tax Holiday

In 2010 a tax “holiday” was put in place as part of the Patient Protection and Affordable Care Act for the employee portion of Social Security. At that time the employee tax rate was reduced from 6.2 percent to 4.2 percent. This tax “holiday” was not extended beyond 2012.  This means that all employees will be taxed at the full rate of 6.2 percent of taxable wages beginning with the first pay in 2013.  The annual Social Security wage limit for 2013 has been increased to $113, 700.

Additionally, another component of the Patient Protection and Affordable Care Act becomes effective in 2013. A new Medicare tax will take effect for employees with earnings exceeding $200,000 annually. This new tax rate of .9 percent will begin withholding upon meeting or exceeding the $200,000 threshold.. It is important to note this earnings threshold and understand how this additional Medicare Tax may apply to you based on your marital status and whether you and your spouse file joint or separate tax returns.  Please see a tax professional for more details.  Additional information can be found on the IRS website (www.irs.gov).

 
 
 

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I am passionate about sharing senior citizen news and resources discovered from both my profession and personal journey.

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