This month, you may have noticed your take-home pay get a little bigger. If you did, that’s likely due to President Donald Trump’s executive order allowing employers to defer the collection of payroll taxes between Sept. 1 and Dec. 31, 2020.
The payroll tax deferral is available to employees with income under $104,000 annually, but not all employers will take the opportunity to delay the collection of these taxes. If your employer does, you’ll see the amount you get from your paycheck rise by about 6.2% until the end of the year, as this money would normally be taken out of your checks to fund Social Security.
While it may be nice to get this extra cash now, you could pay for it next year. In fact, you could see your take-home pay fall by 12.4% starting in January and going through April. Here’s why.