What no Fiscal Cliff Means for You

rows of $100 bills

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.

About the Author

Amy Bushatz
Amy is the editor in chief of Military.com’s spouse and family blog SpouseBuzz.com. A journalist by trade, Amy also covers spouse and family news for Military.com where she is the managing editor of spouse and family content. An Army wife and mother of two, Amy has been featured as a subject matter expert on CNN.com, NPR, Fox News, NBC, CBS, ABC and BBC as well as in the New York Times, Wall Street Journal and Washington Post. Follow her on twitter @amybushatz.

6 Comments on "What no Fiscal Cliff Means for You"

  1. For a retired military person, what changes will occur to my retainer check?

  2. It won't effect our retired pay.

  3. retired 462 | January 3, 2013 at 9:41 am |

    Most voters really can't complain! They sent the same losers back for another term!

  4. Atlas Shrugged The Movie

    ‎"Or did you say it's the love of money that's the root of all evil? To love a thing is to know and love its nature. To love money is to know and love the fact that money is the creation of the best power within you, and your passkey to trade your effort for the effort of the best among men. It's the person who would sell his soul for a nickel, who is the loudest in proclaiming his hatred of money – and he has good reason to hate it. The lovers of money are willing to work for it. They know they are able to deserve it.

    "Let me give you a tip on a clue to men's characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it."

    – Francisco d'Anconia, Atlas Shrugged

  5. Please sign the petition to end furloughs for all DoD Civilians as long as any federal worker receives bonuses.
    https://petitions.whitehouse.gov/petition/exempt-

Comments are closed.