---
title: Workers spent more than expected during payroll tax cut
description: While many workers are seeing a significant increase of their paychecks this year going to taxes, a recent study by the New York Fed found workers spent larger portions of their incomes during the 201
---

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January 31, 2013

# Workers spent more than expected during payroll tax cut

Written by: [Innovative Employee Solutions](https://blog.innovativeemployeesolutions.com/ies-blog-nb-24/author/innovativeemployeesolutions)

While many workers are seeing a significant increase of their paychecks this year going to taxes, a recent study by the Federal Reserve Bank of New York, commonly known as the New York Fed, found workers spent larger portions of their incomes [during the 2011](http://www.newyorkfed.org/research/staff_reports/sr592.pdf) payroll tax cuts than they expected to.

The organization surveyed workers in September 2011 and then in December 2011, a period during which tax withholdings had been reduced [from 6.2 percent](http://blogs.wsj.com/economics/2013/01/29/workers-spent-more-of-payroll-tax-cut-than-they-intended/) to 4.2 percent, explains The Wall Street Journal, which states income tax break affected roughly 155 million workers. The withholding decrease was extended through 2012 and then eliminated as part of fiscal cliff resolutions.

While workers intended to spend between 10 percent and 18 percent of their tax-cut income on goods and services, they reportedly spent between 28 percent and 43 percent. Survey authors stated these figures are higher than previously estimated.

More than half of surveyed workers intended to save the extra money granted by the tax break and nearly 19 percent of those who wanted to save ended up spending most of it.

According to the report, spending was most common among high earners.

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