Military Payroll Tax Deferral 2020 | Temporary Social Security Deferral for Servicemembers

The payroll tax deferral for military servicemembers starts with the 15 September 2020 mid-month pay. It will continue until 31 December 2020.

In summary, the payroll tax deferral will delay the collection of 6.2% of your base pay from 1 September to 31 December 2020. Unless the executive order or laws change, the deferred 6.2% tax will collected from 1 January to 30 April 2021, in addition to the normal 6.2% withheld.

This is in effect a loan that will need to be paid back, not a tax cut. Treat it like a loan and be ready for 15 Jan 2020 when your pay will be about 6.2% lower than it should be with the extra 6.2% coming out.

I recommend setting aside the extra income in an emergency fund or other savings account so you are prepared when your paycheck gets an approximately 6.2% cut 1 January to 30 April 2021.

How Much is the Payroll Tax Deferral?

Here are a few examples of how much money your Payroll Tax Deferral will be.

For a 4 year E-4, this tax deferral will mean $653 extra will be paid over the next 4 months to the servicemember, or about $81 per paycheck.

A 12 year E-6 technical sergeant will see $990 from 1 September to 31 December 2020, or about $123 extra per paycheck.

A 12 year O-4 will see about $242 extra in each paycheck or $1942 total over the next 8 paychecks.

Note that you will need to pay back an equal amount from January 1 to April 30, 2021. It will be automatically deducted from your paycheck. I recommend you save up the amount required to be paid back so you can access those funds if necessary in the first third of 2021.

Payroll Tax Deferral Per Paycheck, Enlisted and Officer

	Less than 2	Over 2	Over 3	Over 4	Over 6	Over 8	Over 10	Over 12	Over 14	Over 16	Over 18	Over 20	Over 22	Over 24	Over 26
E-9							170	174	178	184	190	199	207	215	228
E-8						139	145	149	153	158	167	172	179	184	194
E-7	97	105	109	115	119	126	130	137	143	147	152	153	159	162	174
E-6	84	92	96	100	104	113	117	124	126	128	129	129	129	129	129
E-5	77	82	86	90	96	103	108	109	109	109	109	109	109	109	109
E-4	70	74	78	82	85	85	85	85	85	85	85	85	85	85	85
E-3	63	67	71	71	71	71	71	71	71	71	71	71	71	71	71
E-2	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60
E-1	54	54	54	54	54	54	54	54	54	54	54	54	54	54	54
	Under 2	Over 2	Over 3	Over 4	Over 6	Over 8	Over 10	Over 12	Over 14	Over 16	Over 18	Over 20	Over 22	Over 24	Over 26
O-6	215	236	252	252	253	263	265	265
O-5	179	202	216	218	227	232	244	252	263
O-4	155	179	191	194	205	216	231	243	251	255	258	258	258	258	258
O-3	136	154	166	181	190	199	206	216	221	221	221	221	221	221	221
O-2	117	134	154	159	162	162	162	162	162	162	162	162	162	162	162
O-1	102	106	128	128	128	128	128	128	128	128	128	128	128	128	128
	Under 2	Over 2	Over 3	Over 4	Over 6	Over 8	Over 10	Over 12	Over 14	Over 16	Over 18	Over 20	Over 22	Over 24	Over 26
O-3E		181	190	199	206	216	224	229	236	236	236	236	236
O-2E		159	162	168	176	183	188	188	188	188	188	188	188
O-1E		128	137	142	147	152	159	159	159	159	159	159	159
	Under 2	Over 2	Over 3	Over 4	Over 6	Over 8	Over 10	Over 12	Over 14	Over 16	Over 18	Over 20	Over 22	Over 24	Over 26
W-5												250	262
W-4	140	151	155	160	167	174	182	193	202	212	219	227	237	246	256
W-3	128	134	139	141	147	158	170	175	182	188	200	208	213	218	225
W-2	113	124	128	130	137	149	154	160	167	172	177	183	186	189	189
W-1	100	110	113	119	127	137	142	149	156	161	166	172	172	172	172

Payroll Taxes On LES

You can find your payroll deduction amount on MyPay and under the deductions section of your LES. It is listed as “FICA-SOC SECURITY”

Why is the Military Social Security Deferral Happening?

Here is the email from DFAS explaining why this is happening. Essentially President Trump issued a memo and the Department of Defense must comply, even though this will probably harm more servicemembers than it will help.

In order to provide relief during the COVID-19 pandemic, a Presidential Memorandum was issued on August 8, 2020 and guidance followed by Internal Revenue Service on August 28, 2020, to temporarily defer Social Security (Old Age, Survivors, and Disability Insurance (OASDI), as seen on the Leave and Earnings Statement (LES) as “FICA-SOC SECURITY”) tax withholdings in the pay of some service members.

Effective for the September mid-month pay, DFAS will temporarily defer the withholding of your 6.2% Social Security tax if your monthly rate of basic pay is less than $8,666.66.  If your monthly rate of basic pay is at or above this threshold, your social security tax withholding will not be affected by the temporary deferral.

Key Facts:

– The Social Security tax is labeled as “FICA-SOC SECURITY” on the LES and is calculated as 6.2% of your basic pay.
– This change is effective through the end of the 2020 calendar year and only applies to your Social Security tax withholding.  Normal withholding of your FICA-Social Security taxes will resume effective January 1, 2021.
– You are not eligible to opt-out of the deferral if your basic pay falls within the stated wage limits.  The deferral will happen automatically.
– In accordance with current IRS guidance, collection of the deferred taxes will be taken from your wages between January 1 and April 30, 2021. Additional information on the collection process will be provided in the future.
– If you separate or retire in 2020 before the Social Security tax can be collected in 2021, you are still responsible for the Social Security tax repayment.

As more information becomes available, it will be posted on:
https://www.dfas.mil/taxes/Social-Security-Deferral/

For questions on the temporary deferral of the 6.2% Social Security withholding:
– Visit the IRS page: https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding

For more information on financial readiness:
– Visit https://finred.usalearning.gov/
– Visit your installation Military and Family Support Center and speak with a Personal Financial Manager or Counselor, or contact Military OneSource at https://www.militaryonesource.mil

All the above being said, this makes no sense as a method of relief if the money will need to be paid back in January to April 2021.

Temporary Payroll Tax Deferral for Military FAQ