Trump’s executive orders: Payroll tax deferral. Rose Law Group attorney Dan Gauthier outlines what this “payroll tax holiday” could mean for employers.

By Daniel Gauthier | Rose Law Group Reporter

Over the weekend President Trump signed four executive orders providing COVID-19 related relief to Americans. The President’s actions come as Congress continues to negotiate – and fails to agree on – the next round of COVID-19 stimulus funding.

Contained in one of the executive orders is a payroll tax deferral for certain American workers whose pre-tax bi-weekly wages are less than $4,000. Importantly, the measure does not eliminate payroll taxes, it defers them starting September 1, 2020 through December 31, 2020.

Payroll taxes deferred are limited to amounts payable by employees under the Federal Insurance Contributions Act (FICA), which include Social Security and Medicare.

The executive order does not require employers to pass on the deferred tax savings to employees. It remains to be seen how employers will implement this payroll tax holiday and whether employees will see a change in net earnings.

Since the payroll taxes are not forgiven and come due at the end of 2020, employers may not want to stop withholding these amounts from employee paychecks so as to mitigate the impact of the deferred taxes coming due.

President Trump has said, if reelected, he will seek to forgive these payroll taxes, but such an act requires congressional action. Some employers, particularly small businesses who are generally less liquid than other companies, may be reluctant to pass the balance to their employees.


The views expressed above are not necessarily those of Rose Law Group pc or its associates and are in no way legal advice. This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. For legal advice, contact Dan Gauthier or any of the attorneys at Rose Law Group.