Social Security tax break creates UMPIP opportunity
On Dec. 17, President Obama approved a tax relief package that includes a Social Security tax break. The tax break goes into effect in January 2011 and will result in higher take-home pay for many employed individuals who pay into Social Security.
The new law decreases the percentage of annual earnings* that employees pay into Social Security (the OASDI portion of FICA taxes) in 2011 from 6.2 percent to 4.2 percent. This is for 2011 only.
If you are a clergyperson, the new law also applies to you. It decreases the self-employment taxes that you pay in 2011 from 15.30 percent to 13.30 percent.
This higher take-home pay creates an opportunity to begin or increase your United Methodist Personal Investment Plan (UMPIP) contributions.
Note: the Illinois General Assembly passed a state income tax increase of 2 percent which will run through 2015 which was signed by Governor Pat Quinn. The state income tax rate will rise from 3 to 5 percent and will also impact the amount of take-home pay.