Business Advisory Services Group
With lawmakers deadlocked in coming to an agreement on the terms of an extension of future COVID-19 relief provisions, President Trump has signed four executive orders including a memorandum on a payroll tax holiday for American employees earning less than $100,000 per year.
This particular memorandum would be in the form of a payroll tax deferral and would apply to the employee portion of the payroll taxes (6.2% for Social Security and 1.45% for Medicare) for employees making less than $4,000 per bi-weekly pay period before tax (approximately $100,000 per year). The deferral would apply to wages paid from September 1, to December 31, 2020. The tax is deferred without interest or penalties.
Social Security tax paid by employers was already deferred through the end of the year under prior relief legislation.
If he’s reelected, Trump said, he plans to forgive the taxes and make permanent cuts to the payroll taxes. Otherwise, presumably, workers would have to pay the taxes at the end of the year.
The controversial measure, which has been opposed by both parties, wouldn’t do anything to help the unemployed and would likely weaken the already strained finances of Social Security and Medicare.
Trump also said that his administration was looking at additional income tax and capital gains tax cuts for American taxpayers.
The other executive orders included:
We anticipate many developments and further clarity regarding this announcement to transpire over the next several days.
The information presented here should not be construed as legal, tax, accounting, or valuation advice. No one should act on such information without appropriate professional advice and after a thorough examination of the particular situation.