Frequently Asked Questions:
Is the payroll tax holiday a current law?
No. The payroll tax holiday is an executive order from President Trump. The president can authorize a temporary deferral of payroll taxes, but the deferred taxes can only be permanently forgiven with authorization from Congress.
How long will the holiday last?
According to the executive order, the payroll tax holiday will begin on Sept. 1, 2020 and end on Dec. 31, 2020.
How much will each person receive?
It depends on your income. If you earn $100,000 or less annually before taxes, you’ll see each paycheck increase by about 6.2%. If you make $50,000 per year before taxes, you’ll see an extra $258 per month distributed across your paychecks. Over the four-month holiday period, you’d receive an extra $1,032.
Will I have to pay this money back?
That’s unclear. Since the payroll tax holiday is a temporary deferral, it’s possible that you may have to repay the extra money you receive in your paycheck. It’s also possible that Congress could decide to forgive the deferred payroll taxes.
Your employer could continue withholding your payroll taxes if it’s uncertain whether the deferral will become permanent.
If Congress approves a second stimulus package, more details may be included in that legislation.
Can I choose not to participate?
Watch for guidance from your employer about whether or not your company will participate in the payroll tax holiday. Your employer may choose to continue withholding during a temporary payroll tax holiday. But if your employer pauses withholding, you probably will not be able to ask your employer to hold onto that extra cash.
I’m not working right now. Will I get any money?
The payroll tax holiday only applies to people who are receiving a paycheck from an employer who withholds payroll taxes. If you aren’t working, you won’t receive any funds from the executive order.