It’s expected to be an interesting year for disposable income, thanks to the payroll tax increase that went into effect January 1, 2013.
Across the nation, most U.S. workers saw their take-home salary reduced by 2 percent. Or, in other words, the maximum federal income tax rate on ordinary income increased from 37 percent to 39.6 percent.
All the commotion started in 2010 when the government initiated the payroll tax cut. It was designed to be a temporary cut in withholding to make up for the loss of the Making Work Pay Credit, which expired in 2010. The cut went into affect in 2011, and was intended to last only a year, but was extended into 2012.
At the start of 2013, the federal government decided it was time to retract the payroll tax cut. The reduction in funds each pay period means different things for different households, yet the underlining concern is that less take-home pay equals a diminished will to spread the wealth, literally.
Understandably, charitable organizations and non-profits are particularly concerned about the nationwide clutching of coin purses caused by the reduction in payroll combined with increases in gas and grocery prices.
However, according to Atlas of Giving, which performs monthly measurements and forecasts of charitable giving throughout the United States, the two percent decrease in take-home pay will have little affect on whether or not workers plan to donate their hard-earned income. In fact, the organization suggests that despite the payroll reduction, some sectors actually are expected to have increases in 2013.
The most noteworthy changes in charitable giving include:
*Contributions to nature/environmental causes. These organizations experienced the largest increase in 2012 (10.9%), and they’re expected to have the largest increase in 2013 (5.9%).
* Gifts to the education sector increased by 8.8% in 2012, and they’re expected to increase by 2.6%.
*Donations to the Arts increased by 8% in 2012, and they’re predicted to increase by 2.7% in 2013.
*Contributions to society / benefit organizations increased by 7.8% in 2012, and are expected to increase by 2.7% in 2013.
*Religion – the largest giving sector – had the lowest growth rate in 2012 (4.2%), and it’s the only category expected to have a decrease in numbers throughout 2013. Forecasts indicate that religious giving will decrease by 0.8% in 2013.
Despite having less take-home pay thanks to the upped payroll tax, U.S. workers are expected to continue giving to organizations they feel strongly about, albeit giving modestly.
Based on current data, Atlas of Giving predicts overall charitable donations for 3013 will reach a baffling $375.13 billion, up 1.6% compared to 2012. However, the next year is predicted to show one of the slowest growth rates in 50 years.
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