Military Tax Deferment Calculator
Beginning September 15th, 2020, service members will see a larger than normal paycheck. President Trump signed an executive order that allows companies to not withhold Social Security (Old Age, Survivors, and Disabilities Insurance (OASDI)) from September 2020 to the end of December 2020. This is only a deferment and will need to be paid at a later date. Military members will not be able to opt-out of the deferred Social Security tax withholdings. With that said, all military members who had a monthly basic pay of less than $8,666.66 will not have Social Security tax deducted from your pay. Beginning January 2021 and ending April 2021, the normal Social Security tax withholdings will continue plus a makeup tax withholding in order to recover the Social Security tax that was deferred. After April 2021, only the normal Social Security tax rate will be withheld.
Service members will see an increased paycheck over the next four months and then a much smaller paycheck from January to April. This is not free money by any means. This is only deferred taxes which will be recouped come January. On your Leave and Earnings Statement (LES), you will see Social Security listed as “FICA-SOC SECURITY” under the deductions section. This amount is set by law at 6.2% of the military member’s basic pay.
It is highly recommended that you do not spend this increase in pay over the next four months and instead, place this into a savings account where it will not be touched until January 2021. Then use the savings to supplement the decreased paycheck between January and April. You can use the calculator below to see how much you will need to pay back come January based on your current pay rate.