First Checks for Troops Go Out Under Trump's Controversial Payroll Tax Deferral Plan

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Military pay. Military OneSource photo
Military pay. Military OneSource photo

Most service members and Defense Department civilians have received their first paychecks with a higher take-home total, thanks to a temporary payroll tax deferral plan rolled out by the White House.

The checks went out Tuesday even as the Pentagon advised troops to "plan ahead" for when it all has to be paid back starting Jan. 1.

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Unlike for the private sector and state governments, participation in payroll tax deferral, which currently devotes 6.2% of paychecks to the Social Security trust fund, is mandatory for service members, DoD civilians and the entire federal workforce.

Congress has also declined to participate in the plan.

The DoD guidance said that the plan would "temporarily defer the withholding of Social Security taxes for certain individuals beginning September 1, 2020, through December 31, 2020." The program was created through an Aug. 8 executive order from President Donald Trump.

The plan applies to service members whose monthly basic pay rate is less than $8,666.66.

While those participating in the deferral will have temporary access to more cash, critics warn that the payback requirement -- plus the resumption of the standard $6.2% Social Security tax withholding -- will feel like a 12% pay cut in January.

"The Department is providing information to service members so that they know why their take-home pay will increase during the last four months of 2020 and so that they can plan ahead the withholding of the deferred taxes during the first four months of 2021," DoD officials said in guidance.

In a Twitter post Sept. 11, Trump said that he would forgive repayment if he is re-elected, without mentioning that legislation from Congress that would be needed to do so.

"When we win I, as your President, will totally forgive ALL deferred payroll taxes with money from the General Fund. I will ALWAYS protect Seniors and your Social Security! Sleepy Joe Biden will do the opposite, he will raise your taxes and DESTROY our Country," Trump said.

Michael Rigas, acting deputy director at the Office of Management and Budget, said in a memo sent the same day that "the president and the administration continue to advocate for Congressional action to make the payroll tax deferral permanent."

Rep. Kevin Brady of Texas, the top Republican on the House Ways & Means Committee, this month introduced the "Support for Workers, Families, and Social Security Act" to forgive the deferred payroll taxes, and called on Democrats for support.

-- Richard Sisk can be reached at Richard.Sisk@Military.com.

Related: Trump Says Troops Won't Have to Pay Back Deferred Payroll Taxes -- If He Wins

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