2013 will bring smaller paychecks. That is because the payroll tax break is going away.
The payroll tax funds social security. 4.2% was being taken out of your check the last two years, now it is going to 6.2% effective January 1.
"I just have to find the savings somewhere," said Shockoe Bottom business owner David Napier. "I'm not the government. I can't run out and borrow it."
Napier is now cleaning up from holiday celebrations and telling his workers paychecks are getting smaller. Payroll taxes are going back to the rate they were before the economic downturn.
"It's a hit," said Napier."I've got to match it dollar for dollar."
The national average salary is about $41,000. People in that pay range are expected to take home at least $32.00 less in every pay check.
"That is for each employee," notes Napier. "So if it's 10 employees that's $320 dollars a pay period that the business has to come up with that it didn't come up with last year."
That drove us to the Virginia Retail Association. They are gearing up for a less than stellar year.
"From the retail perspective we are going to feel the pain, the pinch," said Jodi Roth with the Virginia Retail Merchants Association.
The fear is that shoppers are calculating every expense and may soon have to dispose of disposable income. It would come right at the slowest time of year for retailers.
"People are going to spend a little bit less and we just have to be ready as business owners," said Napier. "We have to be smarter. Turn the lights off at night. Do everything you can do to save that little dollar."
The higher the salary [up to $113,000] the more you pay. Government officials say the tax break was always meant to be temporary.
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