Did You Notice the Payroll Tax Cut?

How did consumers use the extra two percent they received in their paychecks in 2011?  The National Foundation for Credit Counseling (NFCC) conducted an online poll of 1,800 in January 2012 to determine if the objective of the tax cut is being realized.  It is sad that 66 percent were unaware that their paychecks were larger in 2011.

“Even if the dollar increase is small, consumers should be aware of it,” said Gail Cunningham, spokesperson for the NFCC. “Not recognizing that the paycheck was larger begs the question of how the additional money was spent. Knowing how much you make and consciously determining how to spend it are basic building blocks of financial stability. This poll provides another example of the need for increased financial education.”

Poll question and responses

The poll question asked what they did with the additional two percent they received in their paycheck as a result of the payroll tax cut. A majority (66 percent) didn’t notice the increase. Those that were aware used it responsibly to pay debt, contribute to retirement or savings.

Only one percent bought something special.

The responses to the poll question were as follows:

66 percent didn’t realize their paycheck was larger.

18  percent used it to pay off debt.

8 percent caught up on past-due bills.

4 percent increased their retirement contributions.

3 percent saved most of it.

1 percent treated themselves to something special.

You should check each paycheck for accuracy, especially when you are given a raise or bonus.  Was the reason the majority weren’t aware of the tax cut because the amount wasn’t really noticeable? Did you notice the two percent increase in your paycheck?  If you did, what did you do with it? Hopefully you will pay attention now and determine what you will do with the additional money,  because on February 1, 2012, Congress extended the payroll tax cut for the remainder of the year.

Credit Expert Witness, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.

Categorised in: Debt, Financial, Internal Revenue Service

This post was written by John Ulzheimer