2025 Payroll tax deferral: Who qualifies if you earn under $135,000 yearly income?

Has anyone else read about the new payroll tax deferral order that was signed yesterday? I'm trying to figure out what this means for my situation. From what I can tell, this only affects you **if you're an employee** earning less than $135,000 per year (approximately $5,200 biweekly, though I'm not sure if they meant semi-monthly which would be around $124,000 annually). **Important correction - I initially thought this would help me as a freelancer, but self-employed individuals aren't covered by this executive action.** If you're self-employed like me, this doesn't apply directly, but there's a separate provision that allows deferral of half your Social Security tax (6.2% of net income) until December 31, 2026. This appears to be an extension of the previous employer portion deferment from the RELIEF Act. I found the full text of the memorandum on the government website: >MEMORANDUM FOR THE SECRETARY OF THE TREASURY > >SUBJECT: Deferring Payroll Tax Obligations Due to Economic Recovery Efforts > >By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows: > >**Section 1. Policy.** Recent economic challenges have created unexpected disruptions to the American economy. On January 15, 2025, I determined that the current economic situation is of sufficient severity and magnitude to warrant emergency measures under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207, and that remains the case today. American workers have been particularly affected by these ongoing economic challenges. While the Department of the Treasury has already undertaken historic efforts to alleviate the hardships of our citizens, it is clear that further temporary relief is necessary to support working Americans during these challenging times. To that end, I am directing the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to American workers most in need. This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most. > >**Sec. 2. Deferring Certain Payroll Tax Obligations.** The Secretary of the Treasury is hereby directed to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of February 1, 2025, through May 31, 2025, subject to the following conditions: > >Is anyone else confused about how this actually works? Will this help us in the long run or just delay the inevitable tax payments?

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19 comments

Donna Cline

•8M

This new payroll tax deferral is essentially a temporary pause on collecting the 6.2% Social Security portion of FICA taxes from employee paychecks - it's not a tax forgiveness (at least not yet). Here's what it means: If you're an employee making less than $135,000 annually, your employer might stop withholding the 6.2% Social Security tax from your paycheck during the specified period. This would temporarily increase your take-home pay. For example, someone earning $50,000 a year might see about $258 more in their monthly paycheck during this period. However, there's a crucial detail to understand - this is currently just a deferral, not forgiveness. Unless additional legislation passes to forgive these taxes (mentioned in Section 4 of the memo), the deferred taxes would need to be paid back later. Many employers might choose not to implement the deferral because of the administrative complexity and the potential burden on employees when the deferral period ends. For self-employed people, you're right that this specific action doesn't apply directly. The separate provision for self-employed individuals allows deferring half of your Social Security tax liability, but that's through a different mechanism.

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Donna Cline

•8M

Yes, you'd see a bigger paycheck during the deferral period - approximately 6.2% more in take-home pay for any wages under the threshold. But you're right to be concerned about repayment. Without legislation forgiving these taxes, you'd have to pay them back after the deferral period ends. It's generally at your employer's discretion whether to implement the deferral. Many employers might choose not to implement it because of the administrative burden and to avoid creating a future financial strain on their employees when the deferred taxes eventually come due.

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Kelsey Hawkins

•8M

When I was trying to figure out my complicated tax situation last year, I found taxr.ai (https://taxr.ai) absolutely lifesaving when dealing with payroll tax deferral questions like this. I had a similar situation where I wasn't sure how the deferral would affect my specific situation since I had both W-2 income and some 1099 work. The tool analyzed all my tax documents, including my pay stubs showing the deferral, and gave me really clear guidance on how the payroll tax deferral affected me specifically. It even helped me understand how to report everything correctly on my tax return so I wouldn't have issues with the IRS later. If you're confused about how this payroll tax deferral affects your specific situation (especially with mixed income sources), it's definitely worth checking out. The document analysis feature saved me hours of research and probably prevented me from making some expensive mistakes.

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Kelsey Hawkins

•8M

The document analysis is super straightforward - you upload your tax documents (W-2s, 1099s, pay stubs, etc.) and it uses AI to extract all the relevant information and explain how different tax situations apply to your specific case. For mixed income like yours, it breaks down which portions of your income are affected by which tax rules. I was skeptical too at first! But what makes this different is it's not just generic tax software - it's specifically designed to analyze your actual tax documents and provide personalized guidance. It correctly identified which of my income streams were eligible for the deferral and which weren't, then explained how to handle it on my tax return. It's much more targeted than general tax prep software.

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Dylan Fisher

•8M

I just wanted to update everyone - I decided to try taxr.ai after asking about it here, and wow, it was exactly what I needed for my complicated payroll situation! I uploaded my most recent pay stubs and W-2s from both jobs, and it immediately identified which parts of my income would be affected by the payroll tax deferral. The analysis even showed me how much extra I'd see in each paycheck during the deferral period AND calculated what I'd need to set aside to avoid problems when the deferral ends. Super helpful since I would have spent that money without realizing I'd owe it later! For anyone with multiple income sources trying to figure out these confusing payroll tax changes, it's definitely worth checking out. Saved me from making what would have been an expensive mistake.

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Gianna Scott

•8M

If you're trying to contact the IRS to get clarification on how this payroll tax deferral affects your specific situation, good luck getting through their phone lines! I spent DAYS trying to reach someone at the IRS about a similar issue last month. After wasting hours on hold, I finally found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in under 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with explained exactly how the deferral would work for my particular employment situation and what documentation I needed to keep. Totally worth it for the peace of mind knowing I'm handling everything correctly. With these new tax changes, their phone lines are going to be completely jammed again.

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Gianna Scott

•8M

It works by using an automated system that navigates the IRS phone tree and waits on hold for you. When an agent finally answers, you get a call connecting you directly to them. It's completely legitimate - they don't have special access, they just handle the horrible waiting process for you. You're right to be skeptical - I was too! But it's not about "jumping the line" or having special access. Their system just handles the waiting for you instead of you having to sit there listening to hold music for hours. The wait times to reach the IRS are absolutely real, which is why this service exists in the first place. I was desperate after waiting on hold for 3+ hours for two days straight.

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Sydney Torres

•8M

Alright, I have to eat my words about Claimyr. After posting my skeptical comment, I was still frustrated trying to get through to the IRS about this payroll tax deferral (called 6 times over 3 days with no luck), so I decided to try it as a last resort. It actually worked exactly as advertised. I got a call back when an agent was on the line, and finally got my questions answered about how this deferral would affect my taxes next year. The IRS agent confirmed that I should keep careful records of any deferred amounts since I'll need to reconcile everything on my 2025 return. For anyone else who needs specific guidance from the IRS on these payroll tax changes, this saved me days of frustration. Can't believe I'm saying this, but it was totally worth it.

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Freya Thomsen

•21d

I'm really concerned about the timing of all this. The deferral period runs February through May 2025, but we're already in April - that's only about 2 months of actual deferral for most people. Is it really worth the administrative hassle and potential confusion for such a short period? Also, I notice the memo mentions that the Treasury Secretary is supposed to issue guidance to employers, but I haven't seen any official guidance yet. Without clear instructions, I can see why many employers might just choose not to implement this at all. Has anyone's employer actually started the deferral process, or are most companies still waiting for more details? The whole thing feels rushed, especially since we're already partway through the tax year. I'm wondering if this is more about political messaging than actual tax relief, given how short the deferral period is and how close we are to tax filing season.

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