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Here's why: The temporary Payroll Tax holiday (2% of the 6.2% Social Security Tax) ended on December 31, 2012. This return to the prior norm is effectively reducing your paycheck, as compared to 2012. Since the SSA is widely considered to be underfunded, it did not make sense to continue the tax holiday. Unfortunately, other items may impact your net paycheck negatively. Many folks are seeing additional deductions from wages, as of the beginning of the 2013 year. For example, Medical Insurance contribution changes, increased state income tax, or other payroll deductions. I would not expect this tax holiday to be extended as Congress ponders the additional financial strains of the Country.