President Trump's policy for 'bigger paychecks' in 2020 will be mandatory for certain service members

Service members making less than about $104,000 in basic pay each year will have to participate in deferring the payroll tax.


A measure to suspend a payroll tax in 2020 will have to be followed for certain military service members.

Those making less than about $104,000 in basic pay each year will have to participate in deferring the payroll tax, which helps part of Social Security services for people.

Under Internal Revenue Service Guidance, the 6.2% payroll tax deferral will have to be collected from Jan. 1 to April 30, 2021. Other employers have the option not to change things.

The order President Donald Trump signed Aug. 8 allows employers to stop withholding the payroll tax from Sept. 1 through Dec. 31. Employees must make under $4,000 every two weeks to qualify.

Trump's executive action left open the possibility of forgiving the deferred tax later on, CNN reported.

Small business owners are wary about the plan. The tax must still be paid between Jan. 1 and April 30 of next year, which means employees could take an unwanted financial hit or companies might ultimately have to pay the government if staffers leave.

Payroll processor ADP is ready to adjust its computer systems to stop withholding the tax if companies request it, says Pete Isberg, the company’s vice president for government affairs. But so far, there’s little interest, Isberg says.

“A lot of businesses are looking at this and saying, ‘I don’t think so,’” Isberg says.

"The President’s order will give the illusion of pay increases until after the election, and then require service members to pay the money back with double tax withholding," U.S. Rep. Don Beyer, D-Virginia, said in a statement. "This is a disgraceful way to treat those who serve and sacrifice to keep us safe, and Trump’s trickery is obviously designed to help his campaign."

Trump said the order was aimed at putting more money into Americans’ pockets during the coronavirus outbreak.

Hearst TV contributed to this report.