Your Paycheck in 2013: Part 2

Political Calculations

1/5/2013 12:01:00 AM - Political Calculations
Ready for Take 2 on how much of your paycheck you will be allowed to take home in 2013?

Here's the deal. Late on 31 December 2012, the IRS kicked out an advance release of its withholding income tax rates that will apply in 2013, giving U.S. employers until 15 February 2013 to implement them, so our Your Paycheck in 2013, Part 1 tool may still apply until that time, which is something that will depend upon how quickly your employer is able to revise their payroll accounting systems to coincide with the information the IRS cranked out.

The good news is that the bracket creep issue we previously noted in Part 1 has gone away - the personal and withholding allowances have been adjusted for the inflation that occurred from 2011 to 2012. The bad news is that the withholding income tax rates issued by the IRS in its Notice 1036 appear to be based upon the income tax rates that applied before 2001 and 2003, which means that they don't take the tax rates just set by the fiscal cliff deal just passed by the U.S. Congress into account.

So there will almost certainly be a Part 3 edition of our 2013 paycheck tool. In the meantime, the Part 2 edition of our tool will estimate how much of your paycheck you'll actually be allowed to take home before the IRS issues yet another set of new tax withholding instructions to U.S. employers, and also before any state income tax withholding that might affect it is factored into the calculations (unless you live in the states of Alaska, Florida, Nevada, New Hampshire, Tennessee, Texas, Washington or Wyoming, where our tool will give you a pretty good estimate of how much of your paycheck that you will be allowed to keep.)

You can get out tool for calculating your own paycheck here.

We'll update our tool, again, once Washington D.C. gets its act together.

Update 3 January 2012, 7:11 PM EST: We're still waiting. Even though the IRS announced they had issued the new withholding tax rates a little over 9 hours ago, right now, they're still directing employers to issue paychecks based upon the fiscal-cliff edition of withholding taxes that they posted on 31 December 2012, which we used to build the tool in the Part 2 edition of our 2013 paycheck tool. You need to upload the new Notice 1036 and overwrite the old version guys! We'll post Part 3 on Monday, 7 January 2013 if they get things straightened out by then....

Update 4 January 2012, 7:49 AM EST: They've fixed it! We wonder though how many businesses who acted too quickly to implement the new withholding tax rates though will be using the "over the fiscal cliff" version....