{"id":53107,"date":"2020-12-27T17:50:57","date_gmt":"2020-12-27T17:50:57","guid":{"rendered":"https:\/\/one.sightlinemg.com\/armytimes\/uncategorized\/2020\/12\/27\/new-in-2021-your-military-paycheck-is-about-to-get-smaller\/"},"modified":"2026-08-08T07:45:32","modified_gmt":"2026-08-08T07:45:32","slug":"new-in-2021-your-military-paycheck-is-about-to-get-smaller","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/armytimes\/management\/pay-benefits\/2020\/12\/27\/new-in-2021-your-military-paycheck-is-about-to-get-smaller\/","title":{"rendered":"New in 2021: Your military paycheck is about to get smaller"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">More than a million service members will see an extra tax bite out of their paychecks starting in January, as they begin paying back a mandated tax deferral for the previous four months.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.militarytimes.com\/pay-benefits\/2020\/09\/08\/more-than-a-million-troops-to-get-temporary-pay-hike-with-payroll-tax-deferral-but-theres-a-catch\/\" target=_blank>Service members saw their basic pay increase<\/a> by 6.2 percent starting in September, as the result of a Social Security payroll tax deferral put into place by President Donald Trump\u2019s Aug. 8 memorandum, and subsequent Internal Revenue Service guidance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But they now have to pay it back, in addition to the payroll tax resuming.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That bite may be significantly smaller than previously expected, based on <a href=\"https:\/\/www.militarytimes.com\/pay-benefits\/2020\/12\/21\/lawmakers-move-to-ease-tax-repayment-pain-of-more-than-a-million-troops\/\" target=_blank>pending legislation<\/a>. The pending legislation would stretch out the repayments to 12 months, rather than the currently required four months. As of this writing, the provision is including in the pending <a href=\"https:\/\/www.militarytimes.com\/congress\/2020\/12\/21\/congress-races-to-pass-23t-spending-deal-with-696b-for-pentagon\/\" target=_blank>omnibus spending bill<\/a>, which includes pandemic relief and federal spending.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s not clear how quickly the change could be implemented, if the provision becomes law, as expected. The IRS would also have to write implementing guidance, and the Defense Finance and Accounting Service would then set the change in motion.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Under previous guidance from the Internal Revenue Service, defense officials were set to start collecting deferred Social Security payroll taxes from troops\u2019 paychecks in January over a four-month period through April \u2014 paying back the extra money that troops received in their paychecks from September through December.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now that payback would be stretched over 12 months, to Dec. 31, 2021, so the decrease in the paycheck would be one-third of what was previously scheduled.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The amount varies. For example, an active-duty E5 with eight years of service was receiving an extra $205 a month with the tax deferral. Instead of paying back $205 a month over four months, the E5 would be paying back about $68 a month over 12 months, depending on when the repayments start in January. One mitigating factor could make the paycheck bite a little less painful for troops \u2014 the potential 3 percent pay raise for 2021.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This affects all enlisted members, virtually all warrant officers and many officers, to include everyone up through the grade of O-4. Officers in the grade of O-5 with less than 16 years of service, and those in the grade of O-6 with less than 14 years of service are affected. Those who earn more than $8,666.66 a month didn\u2019t have their Social Security taxes deferred, by IRS guidance \u2014 they\u2019ve continued to pay the payroll taxes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The tax deferral was designed to put more money into the pockets of employees, at least temporarily, in an effort to ease some economic problems caused by the COVID-19 pandemic, according to the Trump memo. The tax deferral was mandatory for service members and federal civilians.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unless you were able to put aside the extra money for the last four months, you may be feeling the 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By:"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>New in 2021: Your military paycheck is about to get smaller - Army Times<\/title>\n<meta name=\"description\" content=\"Unless you were able to put aside the extra money for the last four months, you may be feeling the pinch.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"New in 2021: Your military paycheck is about to get smaller\" \/>\n<meta property=\"og:description\" content=\"Unless you were able to put aside the extra money for the last four months, you may be feeling the pinch.\" \/>\n<meta property=\"og:url\" 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