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Don't Be Fooled by January Pay; Higher Taxes Loom

12:30 PM, Dec 22, 2012   |    comments
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STEPHEN OHLEMACHER
Associated Press

WASHINGTON (AP) - Workers probably won't feel the full brunt of next year's tax increases in their January paychecks, but don't be fooled by the temporary reprieve.

No matter what Congress does to address the year-end "fiscal cliff," it's already too late for employers to accurately withhold income taxes from January paychecks.

Social Security payroll taxes are set to increase on Jan. 1, so workers should immediately feel the squeeze of a 2 percent pay cut.

But as talks drag on over how to address other year-end tax increases, the Internal Revenue Service has delayed releasing income tax withholding tables for 2013.

As a result, the American Payroll Association says employers are planning to withhold income taxes at the 2012 rates, at least for the first one or two paychecks of the year.

 

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