Payroll tax deferral kicks in

WASHINGTON—Starting Tuesday until the end of this year, employers can choose whether to defer payroll taxes or continue collecting them from employees who make less than $4,000 on a biweekly basis. The IRS clarified on Friday how it will implement the executive order President Donald Trump signed in August offering a temporary reprieve from the 6.2 percent Social Security tax businesses and employees must pay.

Will the savings last? Right now, the taxes are still due next year. Employers who don’t collect the levy from employees through the end of the year will have to withhold more from payroll checks in 2021 to make up the difference. The U.S. Chamber of Commerce sent a letter last month urging Congress to make the savings permanent: “Without congressional action to forgive this liability, it threatens to impose serious hardships on employees who will face a large tax bill as a result of deferral.”

Dig deeper: Listen to Nick Eicher and David Bahnsen discuss the state of the economy in the Moneybeat segment of The World and Everything in It.