Provided by Assistant Secretary of the Army, Manpower and Reserve Affairs/Deputy Chief of Staff, G-1, HQDA

Social Security Tax Deferral

Social Security tax deferral is a temporary relief being provided during the COVID-19 pandemic. Based on guidance from the Internal Revenue Service, a presidential memorandum has been issued to temporarily defer Social Security taxes. This change is effective from mid-September until December 2020. Soldiers and civilian employees don’t have an option to opt out.

Individuals whose monthly basic pay is less than $8,666.66 will benefit from this deferral. For those with the monthly basic pay at or above this threshold will not be affected by the temporary deferral. This threshold was established by the Department of Treasury.

The Army is taking steps to notify and educate service members and DA Civilian employees of changes to their payroll tax withholding to allow them to plan ahead to payback the withholding of the deferred taxes during the first four months of 2021.

  • Effective mid-September to December: Defense Finance and Accounting Service will temporarily defer the withholding of the 6.2% Social Security tax, to allow a larger paycheck.
  • January- April 2021- DFAS will begin collecting the tax deferment alongside the FICA tax deducted from monthly pay, resulting in less money in the paycheck.

If a military member or civilian employee separates or retires in 2020 before the Social Security tax can be collected in 2021, they are still responsible for the Social Security tax repayment.

The Army leaders encourage the Soldiers and Civilian employees to have a two-fold plan to account for the payback of the deferred social security taxes in January 2021:

  • Check: Leave and Earnings Statement in the deduction section for FICA-Social Security taxes to identify the amount deferred for the applicable pay period.
  • Adjust: tax liabilities during the January through April 2021 time period. DFAS will administer the deferral and tax liability.

To avoid unnecessary hardship that may be brought on by additional spending decisions:

  • Soldiers should consult with a Personal Financial Manager or counselor at Army Community Service, or contact Military OneSource for support.
  • Civilian employees should seek advice from a Employee Assistance Program financial counselor.

Personal financial readiness is vital to overall Army mission readiness. Army encourages its force to save the deferred money, or plan to adjust their spending to accommodate the payback.