How to plan for the payroll tax increase - - The News for South Mississippi

How to plan for the payroll tax increase

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More than three quarters of Americans will be putting less money in their pockets with every paycheck because Congress did not extend the payroll tax holiday.

Instead of waiting to see if your next paycheck is less than you are used to making, Community Bank Chief Executive Officer David Hughes recommends planning ahead.

"Talk to whomever handles your payroll at your company and find out how much that really impacts your take home pay," Hughes said. "Then you can look at your personal budget because you know whether it is $50 or $500 a month, it is going to have some kind of impact on your personal budget."

The payroll administrator should also be able to help you explore options, so maybe you won't have to take as big of a pay cut.

"You might look at altering your deductions somewhat. If you get a large tax refund every year you might change deductions. You wouldn't get as large of increase, but you also would not lose as much increase pay in your taxes."

For those making between $40,000 and $50,000 a year, they will see an average increase of $579, according to the tax policy center. And the US Census Bureau shows most South Mississippians fit into that category. The median income in Harrison County is $44,550, Hancock County is $42,591 and Jackson County is $49,620.

"Determine from your family budget what adjustments you will have to make, whether it's taking your lunch to work or carpooling or looking at those entertainment items that are discretionary. It's going to affect everyone's discretionary income," Hughes said.

The key is to plan ahead before you continue on with your normal spending habits. If you need help adjusting your personal budget, Hughes recommends going to your financial institution.

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