Ready for Take 2 on how much of your paycheck you will be allowed to take home in 2013?
Here's the deal. Late on 31 December 2012, the IRS kicked out an advance release of its withholding income tax rates that will apply in 2013, giving U.S. employers until 15 February 2013 to implement them, so our Your Paycheck in 2013, Part 1 tool may still apply until that time, which is something that will depend upon how quickly your employer is able to revise their payroll accounting systems to coincide with the information the IRS cranked out.
The good news is that the bracket creep issue we previously noted in Part 1 has gone away - the personal and withholding allowances have been adjusted for the inflation that occurred from 2011 to 2012. The bad news is that the withholding income tax rates issued by the IRS in its Notice 1036 appear to be based upon the income tax rates that applied before 2001 and 2003, which means that they don't take the tax rates just set by the fiscal cliff deal just passed by the U.S. Congress into account.
So there will almost certainly be a Part 3 edition of our 2013 paycheck tool. In the meantime, the Part 2 edition of our tool will estimate how much of your paycheck you'll actually be allowed to take home before the IRS issues yet another set of new tax withholding instructions to U.S. employers, and also before any state income tax withholding that might affect it is factored into the calculations (unless you live in the states of Alaska, Florida, Nevada, New Hampshire, Tennessee, Texas, Washington or Wyoming, where our tool will give you a pretty good estimate of how much of your paycheck that you will be allowed to keep.)
Update: Go to our final version of our "Your Paycheck in 2013" tool - it went through three iterations through the 2012-2013 fiscal cliff debate!
We'll update our tool, again, once Washington D.C. gets its act together.
Update 3 January 2012, 7:11 PM EST: We're still waiting. Even though the IRS announced they had issued the new withholding tax rates a little over 9 hours ago, right now, they're still directing employers to issue paychecks based upon the fiscal-cliff edition of withholding taxes that they posted on 31 December 2012, which we used to build the tool in the Part 2 edition of our 2013 paycheck tool. You need to upload the new Notice 1036 and overwrite the old version guys! We'll post Part 3 on Monday, 7 January 2013 if they get things straightened out by then....
Update 4 January 2012, 7:49 AM EST: They've fixed it! We wonder though how many businesses who acted too quickly to implement the new withholding tax rates though will be using the "over the fiscal cliff" version....
Previously on Political Calculations
We've been in the business of calculating people's paychecks (not including state income tax withholding) since 2005!
- Your 2005 Paycheck
- Your 2006 Paycheck
- Your 2007 Paycheck
- Your 2008 Paycheck
- Your 2009 Paycheck
- Your Paycheck in 2010
- Your Paycheck in 2011
- Your Paycheck in 2012
- Your Paycheck in 2013: Part 1
- Your Paycheck in 2013: Part 2
But before we forget, your employer pays a lot more to keep you on the payroll than just your paycheck! The tool below shows how much it costs to employ you in 2011-12!
And you should also be aware that the employer's portion of Social Security and Medicare taxes (aka "FICA" taxes) have replaced corporate income taxes almost dollar-for-dollar over the years. Don't let anybody pull the "U.S. corporations aren't paying a fair share of taxes" line with you - they're really paying almost exactly the same share of all U.S. taxes that they have been for the last several decades!
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
ironman at politicalcalculations
Thanks in advance!
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