With the news that the Senate and House yesterday voted to essentially give themselves an extra two months to grapple with major "sequestration" budget cuts, we are wondering what this actually means for you and me, average program-loving, paycheck-reliant military families.
The answer? Still unclear. But here are two things that will definitely be impacting you:
1. Payroll taxes are going up.
What this means: For the last several years we have all been receiving a break on the amount taken out of our paychecks for social security. The deal passed yesterday lets that break go away. Kate ran a great breakdown over at the Paycheck Chronicles on just what that means for you. She came up with some examples using 2012 pay charts. Here they are:
Example one: For an E-5 with 6 years of service, the full rate i $165.06 per month in Social Security taxes. This is $53.25 more than the reduced Social Security tax rate of $111.81.Example two: For an O-3 with 6 years of service, the full rate is $326.85 per month in Social Security taxes. This is $105.43 more than the reduced Social Security tax rate of $221.42.
Example three: For an E-8 with 20 years of service, the full rate is $295.53 per month in Social Security taxes. This is $95.33 more than the reduced Social Security tax rate of $200.20.
Example four: For an O-5 with 20 years of service, the full rate is $508.36 per month in Social Security taxes. This is $163.00 more than the reduced Social Security tax rate of $344.36.
2. Sequestration -- that giant, automatic spending cut plan that meant huge slashes to programs and major questions about what services on military bases (including the commissary) would be left in tact -- has been delayed ... sort of.
What that means for you: This is the part that is still coming together. According to this story, Congress didn't get rid of sequestration altogether -- they just delayed it two months. That means in two months it could again become reality.
Basic message: while you (and every other working American) will see a tax increase in your paycheck, the dooms-day massive spending cuts have been put on hold, for now.
Stay tuned.
