Seal of the United States Internal Revenue Service. The design is the same as the Treasury seal with an IRS inscription. (Photo credit: Wikipedia)
WASHINGTON(AP) — Workers probably won’t feel the full brunt of next year’s tax increases in their January paychecks, but don’t be fooled by the temporary reprieve.
No matter what Congress does to address the year-end fiscal cliff, it’s already too late for employers to accurately withhold income taxes from January paychecks, unless all the current tax rates remain unchanged, which is an unlikely scenario.
Social Security payroll taxes are set to increase on Jan. 1, so workers should immediately feel the squeeze of a 2 percent cut in their take-home pay. But as talks drag on over how to address other year-end tax increases, the Internal Revenue Service has delayed releasing income tax withholding tables for 2013.
As a result, employers are planning to withhold income taxes at the 2012 rates, at least for the first one or two paychecks of the year, said Michael O’Toole of the American Payroll Association.
Scranton City Council will be voting Thursday to introduce a commuter tax, according to a public notice issued today.
A commuter tax – a 1 percent earned-income tax on nonresidents of Scranton who work in the city – is one of the city’s key alternatives to property tax hikes under its revised Act 47 recovery plan adopted Aug. 23.
A 1 percent commuter tax is expected to raise $2.5 million next year and $4 million in 2014 and 2015, city officials have said.
The council ordinance would propose to increase the non-resident earned-income tax from the current 1 percent to 2 percent, while maintaining the earned-income tax of 2.4 percent on city residents, the public notice states.
Some disappointing financial news for Pennsylvania. Revenue collected for October was 3.2% below projections, which translates to $57 million dollars less than expected for the month. $44 million of the shortfall was in the personal income tax category.