The United States Congress, in its infinite wisdom, has again stuck it to the middle class by instituting a ‘stealth’ increase in the payroll withholding tax for 2010. As reported here, the new withholding will afford the Treasury additional cash confiscated from mainly the middle class, but increasingly from the working poor. I know this is NOT the ‘change’ I voted for.

Here is an excerpt from the referenced article:

Instead of seven (7) wage categories, there are now nine (9) wage categories. The new structure allows for direct taxation on the middle class with these wages broken out into smaller categories. The direct hit on the middle class withholding taxes can be seen on all of the new tables. Additionally, the IRS could not explain these changes.

Let’s look at the actual numbers for one category and compare them from 2009 to 2010:

2009 Biweekly, Single, Payroll Period, after subtracting withholding allowances

Not over $276: $0 in taxes

Over $276 – $400: 10% payroll tax

Over $400 – $1,392: $12.40 plus 15% of excess over $400

Over $1,392 – $2,559: $161.20 plus 25% of excess over $1,392

Over $2,559 – $6,677: $452.95 plus 28% of excess over $2,559 (Notice the large salary range)

Over $6,677 – $14,423: $1,605.99 plus 33% of excess over $6,677

$14,423: pays $4,162.17 plus 35% of excess over $14,423

Let’s look at the new numbers for 2010 Biweekly, Single, Payroll Period, after subtracting withholding allowances

Not over $233: $0 in taxes

Over $233 – $401: 10% payroll tax

Over $401 – $1,387: $16.80 plus 15% of excess over $401

Over $1,387 – $2,604: $164.70 plus 25% of excess over $1,387

Over $2,604 – $3,248: $468.95 plus 27% of excess over $2,604 (Notice the large salary range is gone)

Over $3,248 – $3,373: $642.83 plus 30% of excess over $3,248 (Notice the substantial increase and 30% tax rate on these wages)

Over $3,373 – $6,688: $680.33 plus 28% of excess over $3,373

$14,450: pays $4,169.99 plus 35% of excess over $14,450

The middle class could be hit with an additional ( up t0) $200 per paycheck being withheld.

This money will obviously be used to plug the huge holes in the Federal budget. What I want to know is will people be able to get this increased withholding back when they file for a refund or will the laws be change again to block the refunding in 2011? What do you think?

Thanks for your attention.

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About The BETAA at NJIT Mentor

Long Distance Mentor

One response »

  1. Barry Rochester says:

    Great info

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