With the American Taxpayer Relief Act in place and the restoration of the Social Security tax withholding rate to its pre-2011 level, we are hopeful that the release of 2013 withholding tables will set the course for our paychecks for the balance of 2013.
An early release of those tables has been published in IRS Notice 1036 and should be reflected in your payroll checks within a matter of weeks. There is actually a small reduction in the amounts to be withheld during 2013 for all but those earning over about $402,200 (Single table) or $458,300 (Married table). This does not offset the social security change (See our post Smaller Net Pay in 2013? – Payroll Tax Cut NOT Extended for more information) but does offer a small stipend of additional net pay over the amount you would have seen without the 2013 change.
How this small change affects your 3013 income tax returns is yet to be seen. Other than in the higher brackets, the tax rates did not change. Consequently, the lower your annual income, the less likely you are to see large changes between 2012 and 2013.
We will continue to explore how the American Taxpayer Relief Act will affect us all as the year progresses. But for now, the new withholding tables offer slight relief from last year’s Federal income tax withholding levels.