Payroll tax suspension to start in September could increase employee take-home pay

Many people across the country might see their take-home pay increase next month.

Beginning Sept. 1, the payroll tax relief program is scheduled to start. With this program, a portion of income tax from an employee's paycheck that is usually withheld by their employer won't be anymore.

The program could help add about $100 back to an employee's monthly income, providing some relief to people who are struggling financially during the pandemic.

There has been some debate among policymakers about the legality of this program after Pres. Trump announced the move as part of his executive order for COVID-19 relief last week.

READ MORE: COVID-19 orders: A breakdown of Trump's actions on $400 weekly unemployment boost, evictions, student loans, payroll taxes

Since employers are responsible for withholding that money from employee paychecks, they'll also be responsible for adding the money back. This has many worried about who will be held responsible if the withheld tax has to be paid back.

The administration, however, is still trying to figure it out.

"Under (Pres. Trump's) executive order, (employers) could potentially and would have to pay back the FICA that they saved, but he has instructed the Secretary of Treasury to look to see if there is a way to do away with that," said Certified Public Accountant Ed Gardner.

Also, suspension of payroll taxes would see about $139 billion less that would go to Social Security.
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