Does your take-home pay increase because of tax law changes?

If you have received your first 2011 paycheck, you might notice that your tax withholding is different from last year’s, even everything else (salary, exemption, etc) on your paycheck is the same. There are two tax law changes which affect take-home pay:

The first is 2 percentage point “Payroll Tax Cut” for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. This reduction is only for 2011.

The second is the expiration of the “Make Work Pay” credit at the end of 2010. This credit was in effect during year 2009 and 2010. The credit is worth 6.2% of an individual's earned income, with a maximum credit of $400 per person. Married couples who file a joint tax return thus have a maximum credit of $800.

How will these affect your take-home pay? It depends on your annual salary. If you are single and you earn less than $20,000, your take-home pay decreases. For singles who earn more than $20,000 a year, the take-home pay increases. See the two charts below. If both of married couples work, each of them gets 2% payroll tax cut.

The maximum benefit for a single is $2,136 a year. For a couple, it is $4,272.

However, if you don’t pay social security tax (such as many state and local government employees, including teachers), you will not benefit from Payroll Tax Cut. In fact, you will see a decrease in your paycheck due to the expiration of the “Make Work Pay” credit.

If you’re going to benefit from this tax cut, I would suggest you that you put this money into your saving and/or retirment contritbutions.

如果你收到了2011年第一次工資，你可能會注意到，工資單上代扣代繳的稅跟以前的不一樣，這是因為有兩種稅法的改變：

第一是2個百分點的“Payroll Tax Cut”，個人社會保障稅(social security)扣繳率從6.2減至4.2%。這個減稅僅適用於2011年。

第二是 “Make Work Pay” 減稅在2010年年底到期。“Make Work Pay” 減稅只在2009年和2010年有效。它對每個有工作收入的人免工資的6.2%，最高限額$400 。聯合報稅的已婚夫婦可以獲得$800的減稅。

這些如何影響你稅後的薪水呢？這取決於你的年薪。如果你是單身，年收入不到2萬元，你的稅後工資就要下降。如果你的年收入超過2萬美元，你的稅後工資就會上升。從下面的兩個圖可以看到工資和減稅的關係。如果夫妻雙方都工作，他們每個人獲得2％的減稅。

單身在2011年可以減稅$2,136美元。一對夫婦可以減稅$4,272。

不過，如果你不繳納社會保障（如許多聯邦和地方政府的雇員，包括教師）稅，你就不會受益於薪資減稅。實際上，你的稅後收入反而因為“Make Work Pay”的到期而減少。

如果你的稅後工資上升了，我建議你把錢存起來，或者放到退休賬戶里。