What changed in my paycheck? Usually on January 1st of the New Year my paycheck increases, but not this year. What happened? It is not your income tax deduction; it is social security or FICA tax changes.

In prior years, the first paychecks in January often reflected a small upward uptick, even if there had been no change in salary or pay rate. This occurred because of indexing in income tax brackets, standard deductions and personal exemptions. It was always a pleasant experience to see the net pay a little higher. Cost of living seems to creep higher constantly and it was needed to stay comfortable. That didn’t happen this year.

It was January of 2011, two years ago, when the social security tax deduction from everyone’s paycheck decreased from 6.2 percent to 4.2 percent. An instant 2% raise in pay. For two years we have all enjoyed the reduced rate. It was done to stimulate spending and encourage all classes of earners to spend the extra dollars; feed the economy. But all good things must end. The Social Security reserves were running dry at a faster rate than ever before.