If you’ve noticed a bump up in your paycheck since the beginning of the year, here’s why: Workers are enjoying a bit of a Social Security “tax holiday” this year, with Social Security payroll taxes reduced by almost one-third. The percentage of the break is the same for all workers, so the highest earners will see the biggest bump in their paychecks. Workers earning $106,800, for example, will bring home an extra $2,000 this year.
The National Foundation for Credit Counseling conducted an online survey to find out just what consumers will do with their padded bank accounts. (The tax cut was designed to boost spending.) Here are the survey results:
What are you going to do with the extra money in your paycheck?
- Save it (8 percent)
- Catch up on overdue bills (22 percent)
- Pay back creditors (20 percent)
- Increase retirement contributions (3 percent)
- Treat myself to something special (1 percent)
- What extra money? (46 percent)
That's right, almost half of respondents had no idea that they had extra money in their paycheck from the tax holiday, which suggests they either don't look at their income very closely or other tax changes mitigated the effects of the break.
Readers, what will you do with the extra money in your paycheck? Did you notice it was there?