Frequently Asked Questions

Guidelines for Citing BEA Information | ID: 1020 | Created: Mar-01-2013
Answer

How did the expiration of the payroll tax holiday affect personal income for January 2013?

The “payroll tax holiday” expired in January 2013.1 As a result, the social security contribution rate for employees increased from 4.2 percent to 6.2 percent, and the contribution rate for self-employed workers increased from 10.4 percent to 12.4 percent. These increases effectively set contribution rates back to the levels that had been in effect prior to 2011.

Employee and self-employed social security contributions are recorded in BEA’s “contributions for government social insurance” series. In the derivation of personal income, contributions for government social insurance are a subtraction. As a result of the increase in the contribution rates, both personal income and disposable personal income for January 2013 were reduced by about $114.1 billion at an annual rate.

Further details about the payroll tax holiday and its impact on quarterly estimates of personal income and federal government receipts and expenditures can be found in the “Tax Provisions” section of the Federal Recovery Programs and BEA Statistics page of the BEA Web site.


1 The “payroll tax holiday,” which was originally enacted by provisions in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, temporarily reduced the social security contribution rate for employees and the self-employed by 2.0 percentage points for January 2011 through December 2012. See the FAQ "How did the payroll tax holiday and the expiration of the Making Work Pay Credit affect disposable personal income for January 2011?" for more information.

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