Social Security Tax Increasing...Will that affect my budget?

A crucial part of budgeting is also watching the taxes that are taken out of your pay check.  One such tax is the social security tax.  Based on federal law, it is mandated that each employee pay a social security tax even though some of us may not see those funds.  Anyway, the rate at which each employee is taxed is 4.2%.  The rate of 4.2% is a lesser amount than what we have paid in prior years.  I can't remember the year in which President Bush enacted his tax cuts but this is a reduced amount and is part of his work, which is nice.  As of March 1, 2012, I believe, we are supposed to see this rate increase back up to its original rate of 6.2%.

As you budget keep this in mind because this rate will go up 2 percentage points and is taxed against your gross pay.  So let's illustrate this increase.

Yearly Gross Pay Amount	$50,000
Current Social Security Rate	4.2%
Current Amount You Pay In Social Security Tax Per Year	$2,100
Social Security Rate Beginning March 1, 2012	6.2%
Amount You Will Now Pay A Year in Social Security Tax	$3,100
Amount of Income You Will Lose Per Year With This Increase	$1,000
Monthly Amount You Will Lose	$83.33

This is real money that you will no longer be able to spend on yourself.  Please incorporate this into your budget so you are relying on funds that aren't there.  I don't know about you but I could certainly use and extra $83.33/month. 

These funds are certainly needed by all so let's just cross our fingers and hope that the master minds in Washington will understand that we can no longer sacrifice our hard earned dollars for crazy spending bills.  Remember, there is still hope that they could extend this tax break through the end of the year.  If that is the case, then we can put this added worry on hold until 2013...more to come on this topic.

During the State of the Union address President Obama mentioned the fact that the government needs to pass the payroll tax/social security tax cut now and it extend for the rest of the year.  Let's cross our fingers and hope that happens.