{"id":21579,"date":"2021-01-04T17:23:29","date_gmt":"2021-01-04T17:23:29","guid":{"rendered":"https:\/\/one.sightlinemg.com\/navytimes\/uncategorized\/2021\/01\/04\/new-law-eases-tax-repayment-pain-for-more-than-a-million-troops\/"},"modified":"2026-08-08T05:53:00","modified_gmt":"2026-08-08T05:53:00","slug":"new-law-eases-tax-repayment-pain-for-more-than-a-million-troops","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/navytimes\/management\/pay-benefits\/2021\/01\/04\/new-law-eases-tax-repayment-pain-for-more-than-a-million-troops\/","title":{"rendered":"New law eases tax repayment pain for more than a million troops"},"content":{"rendered":"\n

Military members and federal civilians will see a significantly smaller bite out of their paychecks under a new law that stretches their repayment of deferred payroll taxes<\/a> to 12 months instead of four.<\/p>\n\n\n\n

The provision is included in the spending bill that was signed into law by President Donald Trump on Dec. 27. The law includes pandemic relief and federal spending.<\/p>\n\n\n\n

Under guidance from the Internal Revenue Service, defense officials were set to start collecting deferred Social Security payroll taxes from troops\u2019 paychecks over a four-month period spanning January through April \u2014 paying back the extra money that troops received in their paychecks from September through December.<\/p>\n\n\n\n

Now that payback will be stretched over 12 months, to Dec. 31, 2021, so the decrease in the paycheck will be one-third of what was previously scheduled.<\/p>\n\n\n\n

In August, Trump signed an executive order requiring the temporary deferral of Social Security payroll taxes for military members and federal civilian employees, from September through December. While that has meant extra money in troops\u2019 paychecks for four months, they must now pay back those taxes.<\/p>\n\n\n\n

The move was designed to put more money into the pockets of employees, at least temporarily, to ease the economic pain caused by the pandemic. The payroll tax is 6.2 percent of basic pay. Troops will be paying that tax back, in addition to the resumption of the regular payroll taxes.<\/p>\n\n\n\n

The amount varies. For example, an active-duty E5 with eight years of service was receiving an extra $205 a month for four months with the tax deferral. With this last-minute change, instead of paying back $205 a month over four months, the E5 will be paying back about $68 a month over 12 months.<\/p>\n\n\n\n

The tax deferral policy affected 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 were affected. Those who earned more than $8,666.66 a month didn\u2019t have their Social Security taxes deferred \u2014 they continued to pay the payroll taxes.<\/p>\n\n\n\t