Keep an eye on your first paycheck in March, it may be less than you are expecting. The United State Congress has until February 29th the continue the payroll tax cut that is expiring in less than 3 weeks. This is the same tax break that was extended at the last minute at the end of last year, and Congress is still trying to figure out how to fund it.
It is likely the tax cut will be extended, but unless the decision is made by the middle of the week, your paycheck could still be affected. With the uncertainty, payroll processors are required to change their payroll tax rate back to the previous rate of 6.2% for any checks scheduled to be dispersed after the tax cut is scheduled to expire at the end of the month. That is a difference of 2% over the current rate of 4.2%.
Approximately 10% of mid-sized businesses begin processing payroll checks for March starting February 20th and nearly 40% will cut checks by the 27th, according to Chad Richison, CEO of Paycom, a payroll service provider. An estimated 13.5 million companies will be impacted.
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