October 6, 2020 – Illinois and most other states have made the decision not to participate in the President’s payroll tax deferral plan, which he created with an executive order in September. The deferral plan would permit employers to stop deducting Social Security taxes through the end of the year, which would give workers bigger paychecks. Social Security taxes of 6.2% would be waived through the end of the year, but the downside is that double Social Security taxes would then be deducted from first quarter paychecks of next year.
With 62,000 state workers, Comptroller Susanna Mendoza believes the payroll tax would lead workers to believe the deduction is permanent, and then be hit with a 12.4% tax in January. Todd Maisch, president of the Illinois Chamber of Commerce, said the chamber would take a neutral stance on the program. He does not have any hard numbers, but he believes fewer than half of his members will decide to participate. “We are cautioning employers to make sure that their employees know that this is a loan that has to be repaid in January, a time when employees may be struggling to pay off holiday bills,” he said. “This is not another grant program. It is simply a no-interest loan that will come due in January.”
