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State of Delaware: Not Implementing Tax Deferral Program

On August 8, President Trump signed an executive order calling for the deferral of the employee’s 6.2 percent Social Security tax for the period September 1 through December 31, 2020 for all employees earning less than $4,000 in applicable biweekly wages.

This order and IRS guidance requires employers to collect this deferred Social Security tax from January 1 through April 30, 2021.

While employees’ net pay would increase from September through December 2020 (deferral period) it will then decrease from January through April 2021 (collection period).

After careful review of the Presidential Memoranda and the IRS guidance, including a legal review by the Delaware Department of Justice as well as discussion with the State’s software provider for the payroll system, the State of Delaware will not be implementing this program.  The program only provides a temporary benefit to employees and it may result in significant financial challenges for employees in the period of increased deductions. 

As a result of this decision, there will be no need to change or “opt out” of this program as it will not be implemented by the State of Delaware

As in all matters related to your personal taxes, we urge you to seek out professional tax advice when contemplating changes you may wish to make.  Each person’s tax liability is unique to them and only a professional can provide you with the best tax advice.

Stay Safe & Have a Great Back to School Season!!!