Payroll Tax Deferral Executive Order
President Trump recently issued an executive order which allows employees to suspend their portion of social security payroll tax (6.2%) beginning September 1, 2020, and ending December 31, 2020. This would be eligible for employees making less than $4,000 for any bi-weekly pay (or $104,000 per year). This executive order only defers this social security payroll tax – it does not eliminate them and will need to be paid back at a later date. The employer portion of the social security payroll tax will still require to be paid as is.
The Treasury Secretary Mnuchin has also acknowledged this order would not force businesses to stop withholding the tax. Additionally, many employers are expected to wait until the IRS issues guidance on the deferment before deciding whether or not to halt this social security withholding.
Further guidance is needed from the IRS, and the information will be updated as it is received.