Money Roundup: Smaller Paycheck Edition

by Michael on Feb 3, 2013 · 2 comments

Every year around this time I login to our bank account and am surprised at how small (in relative terms) my paycheck is. There are several reasons for this.

For starters, I earn more than the Social Security wage base, so my employer stops withholding FICA-OASDI taxes partway through the year. In January, these taxes come back. And this year they came back plus the payroll tax cut expired.

In addition, our health insurance premiums went up for 2013 and we also increased our retirement and HSA contributions to keep pace with the new limits.

The end result was that, even though I got a raise effective January 1st, my take-home pay went down noticeably vs. what I was used toward the end of last year.

And now… Here are some articles that caught my eye this past week:

That’s it. Hope you’re having a great weekend.

1 Jon @ MoneySmartGuides February 3, 2013 at 2:26 pm

I’ve been hit with the same whammy as you did, along with a twist. I received a raise for this year, but with the payroll tax holiday expiring and my increased 401k contribution my paycheck went down. But, my company switched from paying us bi-weekly to twice a month, the 15th and 30th. So, my paycheck is bigger but it is really smaller when you take into account that I will get 2 less this year.

2 Michael February 3, 2013 at 3:05 pm

Jon: Thanks for stopping by. I get paid monthly, and have for years, so that aspect is a non-issue for me. But it’s definitely an interesting twist. Any idea why they made the switch? Perhaps because it’s cheaper to run payroll less frequently?

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