A reader recently wrote in to ask why his FICA-OASDI taxes increased in 2013. The answer, of course, is that the “payroll tax cut” expired.
The payroll tax cut, which was enacted in 2011 to help stimulate the sputtering economy, reduced your FICA-OASDI (i.e., Social Security) obligation from 6.2% to 4.2%.
Though it was set to expire at the end of 2011, the payroll tax cut was ultimately extended through 2012. But that was the end of the road, as it was allowed to expire amidst the fiscal cliff negotiations.
So… This means that your paycheck will be a bit smaller in 2013. For those earning a median household income of $50k/year, we’re talking about roughly $80/month.