Americans taking home smaller paychecks

Payroll tax holiday expired New Year's Day

POSTED: 06:40 PM PST Jan 14, 2013    UPDATED: 11:32 PM PST Jan 14, 2013 
Congress Agrees On Payroll Tax Cut
PALM DESERT, Calif. -

Have you looked at your most recent paycheck?  You'll notice it's less than it was last year.  The reason, the government is taking more Social Security taxes out of your check.  Congress let the two-year payroll tax holiday expire on Jan. 1.  The payroll tax is now at 6.2 percent, 2 percent higher than it was last year.  For example, someone making $30,000 a year will pay an extra $600 a year in Social Security taxes.

"At some point the Social Security system has to be shored up.  It had to go away at some point," said Dana Crosby, a certified financial planner with the asset management firm, Capital Advisors in Palm Desert.  "Hopefully as we come into a new year, people will have some cost of living increases in their paycheck which will hopefully offset this tax increase."

The so-called payroll tax holiday was originally scheduled to expire at the end of 2011, but Congress extended it for an additional year.