2013 tax changes affect DFAS payrolls

Defense Finance and Accounting Service

INDIANAPOLIS — DFAS military and federal civilian payroll customers are affected by recent changes to the tax law, the 2013 National Defense Authorization Act, and other entitlement changes. Social Security withholding taxes will incr-ease to the normal rate of 6.2 percent.

For the past two years, during the “tax holiday,” the rate was 4.2 percent. This affects military and civilian personnel. Military members will see the change under “FICA,” Federal Insurance Compensations Act, while DOD civilians will see the change on their leave and earnings statements under “OASDI” — for old age, survivors, and disability insurance.

Some of the other changes affecting military personnel include:
• 1.7 percent basic pay increase effective in January.

• Basic Allowance for Subsistence (BAS) increases 1.1 percent.

• Basic Allowance for Housing increases on average 4 percent. A member’s BAH depends on grade, location, and whether the member has any dependents. Members can find out their BAH for 2013 by clicking on the BAH link at the Defense Travel Management Office website www.defensetravel.dod.mil/site/bahCalc.cfm.

The “fiscal cliff” agreement passed Jan. 1 by Congress permanently extends income tax provisions enacted in 2001 and 2003 tax laws for income levels up to $400,000 for individuals and $450,000 for families, but allows income tax rates to rise on taxable income above those levels.

The dollar amount of the Social Security withholding increase varies depending on the individual’s pay grade. These calculations do not include other payroll changes, therefore, net pay for an individual member in 2013 could increase, remain the same, or decrease.