Dorion-Gray: FICA tax increase surprises some taxpayers
With all the end-of-year hype surrounding the fiscal cliff and the relief that came with New Year's legislation permanently extending most income tax rates, one change seems to have been veiled by the settling dust: the 2 percent increase in Federal Insurance Contributions Act (FICA) tax.
That increase, the result of an expiring provision that was not extended, means the vast majority of American workers are now receiving about 2 percent less in their take-home pay, an unwelcome surprise to some people.
In the midst of the last recession a little more than two years ago, Congress passed and the president signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This new law included a 2 percent reduction in the Social Security (OASDI) portion of the FICA tax. The provision was designed to help put a little more money into the wallets of American workers during the challenging economic environment of 2011.