New tax law will affect paychecks

INDIANAPOLIS — Defense Finance and Accounting Service military and federal civilian payroll customers are affected by recent changes to the tax law, the 2013 National Defense Authorization Act and other entitlement changes.

Social Security withholding taxes will increase to the normal rate of 6.2 percent. For the past two years, during the “tax holiday,” the rate was 4.2 percent. This affects military and civilian personnel.

Some of the other changes affecting military personnel include: 1.7 percent basic pay increase effective in January, basic allowance for subsistence increases 1.1 percent, and basic allowance for housing increases on average 4 percent.
The dollar amount of the Social Security withholding increase varies depending on the individual’s pay grade.

Military Reservists and National Guard members will be the first to see potential changes in their net pay as a result of the law. Entitlement changes will be reflected in their January paychecks.

Department of Defense civilians and other federal employees serviced by DFAS and have FICA withheld from that pay, will see FICA withholding changes reflected in paychecks based on the pay period ending Dec. 29 for pay dates beginning in January.

(Defense Finance and Accounting Service)