Despite Unaffected January Paychecks, Higher Taxes Still Loom

Don't be fooled

Workers may not see the effects of next year's tax increases on their January paychecks, but the American Payroll Association ensures they are, indeed, coming. Though Social Security payroll taxes are set to increase on Jan. 1—meaning workers should see a 2 percent cut in their take-home pay—the IRS has yet to release income tax withholding tables for 2013. As a result, employers are planning to withhold income taxes using the 2012 rates, at least for the first one or two paychecks of the year.  If employers don't withhold enough taxes in January, they will have to do so with even more later in the year to make up the difference meaning that taxpayers could get hit with big bills, or penalties, when they file their 2013 returns. If Congress fails to act, workers at every income level will face significant tax increases next year: someone making between $50,000 and $75,000 would get an average tax increase of $2,400, and if paid every two weeks, that's about $92 a paycheck. Someone making between $75,000 and $100,000 would get a tax increase averaging nearly $3,700, and if paid every two weeks, that's about $142 a paycheck. (NBC)

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