I haven’t seen much media coverage of the “Making Work Pay Credit,” but this credit expires soon and will cause a lot of people’s paychecks to be smaller in 2011.
The Making Work Pay Credit was part of the 2009 economic “stimulus” package and existed in 2009 and 2010, but is set to expire on December 31st.
The credit amounts to $400 per person for most working adults. People who receive W-2 wages have received the credit bit-by-bit in each paycheck, in the form of lower withholding.
If Congress does not renew the Making Work Pay Credit, you’ll notice that your first paycheck of 2011 will be lower. The decrease will amount to $33.33 per month per person ($400/12).
President Obama has proposed extending the credit into 2011, but lawmakers have not been receptive to the idea.
(UPDATE: the tax bill signed into law December 17th, 2010, did not extend the Making Work Pay Credit, but it did provide for a reduction in FICA withholding from paychecks in 2011, which will more than offset the expiration Making Work Pay Credit.)