Do you know exactly what’s going in and out of your bank account? Before you answer, consider this: Almost half of Americans don’t, according to a new survey from Bankrate.com. The survey results indicate that 48 percent of people in the U.S. are unaware that their paychecks were slashed by two percent in January, when a tax cut that had been in effect since 2011 expired.
Each month, Bankrate.com surveys approximately 1,000 people in the U.S. about their finances as part of its monthly Financial Security Index. The surveys include five standard questions that cover everything from how secure people feel in their jobs to how comfortable they are with the amount of debt they have, plus a topical question that changes each time. For March’s survey, Bankrate.com asked people how their finances were affected by the change in payroll tax.
If you’re thinking “What change in the payroll tax?” right about now, here’s a refresher course: In 2011 and 2012, U.S. employees got a two percent tax cut, thanks to the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act. That meant that people across America got to keep two percent of their salaries that would have otherwise gone to Social Security. The payroll tax cut was designed to give workers more take-home pay, but it expired at the end of 2012—so you’re now bringing home less cash on payday.
In addition to the 48 percent of Bankrate.com survey respondents who said they were unaware of the change in the payroll tax, seven percent said they were unaffected by it. Eight percent said they’re now putting less money into savings, and three percent said they have scaled back on their retirement contributions. Just 30 percent of respondents said they had curbed their spending because of the tax cut expiration.
While two percent may sound small, it definitely adds up: If your salary is $ 50,000, you’ll pay about $ 1,000 more in taxes this year. So if you don’t plan accordingly, you could do some serious damage to your bank account.
TELL US: How do you cut back in little ways when you have less spending money? Share your tips in the comments!
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