cash (Sergey Didenko/

National Finance Center to implement Trump’s payroll tax deferral on fed paychecks

The National Finance Center (NFC) at the Department of Agriculture said it plans to eliminate deductions for Old Age, Survivors and Disability Insurance from federal employees’ paychecks in accordance with the president’s Aug. 8 executive order deferring employees’ OASDI deductions as a form of tax relief and economic stimulus.

OASDI, according to the Social Security Administration, is virtually synonymous with Social Security, which supplies “monthly benefits designed to replace, in part, the loss of income due to retirement, disability, or death.” It is financed by workers who contribute to the program through a payroll tax that is levied under the Federal Insurance and Self-Employment Contribution Acts.

The news was first reported on

In an Aug. 21 memo, NFC said it is preparing to make “system modifications” to its payroll and personnel system to eliminate the OASDI deductions for all employees whose gross Social Security wages are less than $3999.99 per bi-weekly pay period. The change will be effective with the 17th pay period, which is the first after Sept. 1, NFC said. The president’s order calls for the tax deferral to continue through Dec. 31, after which employees will likely be responsible for repaying the deferred taxes.

The memo concludes by reminding NFC customers that “the executive order refers to the fact that this is a deferral of the deductions, and Treasury should look to have legislation put in place so that employees do not have to pay back these deferred amounts.”

Although the executive order calls for the Treasury Department to issue implementation guidance, sources contacted by TaxNotes said no such guidance has been released.

Samantha Jacoby of the Center on Budget and Policy Priorities told TaxNotes that agencies would likely face the same implementation challenges private-sector business have, adding that there also likely be “‘substantial confusion among federal employees,’ who don’t appear to have any option to continue having their payroll taxes withheld, at least according to the National Finance Center notice.”

NFC said it would provide additional information as it becomes available.

Reader comments

Sat, Oct 3, 2020

Just a heads up...I am a shift worker and my gross flirts around the 4K mark. Last pay period, I had no OASDI taxes taken out. This pay period, I had a small bonus that put me $30 over 4K after health, vision and dental. They took out OASDI for this pay period AND last pay period. This is being evaluated each pay period. I have called the IRS and waiting for them to get back to me. I believe that this is retroactive and that this will hit shift workers with holiday pay. Once you hit the 4K mark, the taxes come due and they withdraw accordingly. This means shift workers flirting around the 4K mark could have a sudden OASDI bill due after one overtime or holiday shift. Make sure you are banking the 6.2% each pay period.

Thu, Sep 17, 2020

Marc's comment is exactly how this mess has started. The IRS has already released statements regarding the deferment and said YOU will have to pay this money back when filing income taxes. To believe a Democratic House and a Republican Senate will forgive this deferment, would be living with one's head in the clouds. The House and the Senate would let it fall on its face before they would intervene. I encourage the employees to save the extra money and get ready to pay Uncle Sam back come January.

Fri, Sep 11, 2020 Will Washington, DC

How does this help anyone? Most of those who may get a larger check because of the deferment - and it may help them in the short term - will not have the money later to pay it back OR it will hurt them more in the future when paying it back. And IF The Govt. decides to forgive that debt, how nice, those who make more and do not get the deferral get screwed!

Thu, Sep 10, 2020

This stimulus plan is a work in progress, but may turn out quite well for those who need the extra 6.2% when all is said and done. Biden is even more idiotic than Trump and Harris is moronic as well. Don’t be fooled by the wool your friends at CNN, ABC, and the Washington Post are pulling over your eyes.

Thu, Sep 10, 2020 Marc

Look Y’all...get a grip. More than likely legislation will be created that allows the individual to not repay the deferred portion. Obviously, collection of the deferred portion is only in the event that no further action is made, which is extremely unlikely. As far as your future SS payments and Potential Retirement Benedits are concerned, this will have nominal impact as long as you are able to Contribute the proper amount of years. Remember, there are Hundreds of thousands of People who presently do not contribute to SS like PERS employees.

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