Payroll tax holiday will boost take home pay

Payroll tax holiday will boost take home pay
August 09 11:13 2020 Print This Article

President Donald Trump signed an executive order Saturday suspending payroll tax collection from September 1 to December 31. The measure would increase take-home pay for the average American household by about $400 per month.

The payroll tax, which funds Social Security and Medicare, includes a 7.65% tax on employees and a 7.65% employer match. The self-employed and independent contractors pay the full 15.3% rate. For a small business with an annual payroll of $400,000, the measure would boost monthly revenue by $2500.

The payroll tax holiday and three other executive orders concerning expanded unemployment compensation, deferral of student loan payments, and a moratorium on evictions came after negotiations broke down between Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer and White House officials to come up with another COVID-19 relief package. The Democrats were demanding financial bailouts for states and cities and changes in election laws, such as universal ballot mail-outs and a prohibition of state Voter ID laws. Congress in on recess until September 14.