Fedweek

A new bill in the Senate would make optional the so-far mandatory change in Social Security payroll withholding that is in effect through the end of the year for most non-postal federal employees.

The bill, sponsored by 17 senators—all Democrats—would require that federal payroll providers withhold Social Security taxes under standard procedures unless the employee requests a suspension in writing.

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Under the policy, in effect since last month, the 6.2 percent Social Security (or OASDI) tax is not being collected from employees with Social-Security taxable earnings under $4,000 in a given pay period. That accounts for the majority of federal employees outside the U.S. Postal Service, which was allowed to opt out of the change, and did, since it operates separately from other agencies for many purposes.

Introduction of the bill follows criticism of the change from federal unions and some in Congress as being confusing and chaotic and leaving unanswered many questions. Employees will be responsible for making up the difference in those taxes starting in January through an increase in Social Security withholdings above their normal rates until the amount is paid back.

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