Payroll tax holiday: How much could you save?

Payroll tax holiday: How much could you save?

President Trump plans to implement a payroll tax cut, and potentially eliminate the levy, which he said will save families a meaningful amount of money.

The initial plan is to defer payroll taxes from September through December. If Trump wins reelection, he said he will have those obligations forgiven entirely, essentially rendering the policy a payroll tax cut.

On Wednesday, he went a step further adding that he would eliminate the payroll tax entirely next year if he is still president.

White House National Economic Director Larry Kudlow has estimated that the policy would save the average person about $1,200 during the course of four months. Those calculations appear to be based on someone earning roughly $58,000 per year.

The payroll tax is paid separately from federal income taxes and funds Social Security and Medicare. Employers and employees each pay 6.2 percent for Social Security and 1.45 percent for Medicare, and an additional 0.9 percent is levied on the highest earners.

The executive order applies only to the 6.2 percent Social Security obligation.

Trump has proposed implementing payroll tax deferrals for employees whose biweekly wages are less than $4,000, on a pre-tax basis.

So how much could you save?

For someone earning $30,000 a year, that amounts to around $155 a month in Social Security taxes, or $620 over four months.

For someone earning $50,000 a year, he or she would save about $258 a month and more than $1,030 from September through December.

A worker earning $75,000 per year would save an estimated $387 a month, or $1,548 over four months.

While an individual earning $90,000 a year stands to save around $465 a month, or $1,860 over four months.

If the amounts are not forgiven by the federal government, individuals may be responsible for paying them back next year.

Source:-foxbusiness

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