Trump Signs Executive Orders on Payroll Taxes, Unemployment Benefits, and Student Loans

Trump Signs Executive Orders on Payroll Taxes, Unemployment Benefits, and Student Loans

After Congressional talks on a second coronavirus relief bill broke down, President Trump signed a series of executive orders intended to provide financial support to workers, the unemployed, and individuals with student loan debt. But because Congress—not the President—controls spending, some of these actions are likely to face legal challenges.

Here are the highlights of the President’s orders, and some of the obstacles that could arise:

  • Payroll Tax Suspension. The President ordered the IRS to suspend collection of the employee portion of the payroll tax—6.2% for Social Security and 1.45% for Medicare—through the end of 2020. The order doesn’t eliminate the taxes; it simply defers them until 2021, at which point they become payable. Even assuming this order withstands legal scrutiny, most workers probably won’t see an increase in their paychecks. That’s because employers are likely to continue withholding payroll taxes from their workers’ paychecks so they can make the tax payments when they come due in 2021.
  • Unemployment Benefit Expansion. Another of the President’s orders would provide up to $400 in supplemental unemployment benefits to jobless Americans, with the states required to cover 25 percent of the cost. The order would also require each state to establish an entirely new system of delivering benefits to the unemployed—outside of their existing unemployment systems. Given the cost to the states, the bureaucratic hurdles involved, and likely legal challenges, it’s unclear whether unemployed Americans will see any extra cash as a result of this order.
  • Student Loan Deferral. Passed in March 2020, the CARES Act suspended federal student loan payments and interest accrual through September 30, 2020. President Trump’s executive order extends this through the end of 2020. The move applies only to federal student loans; private loans aren’t covered. Unlike the President’s other directives, this move is unlikely to encounter legal challenges.

For more information on the COVID-19 pandemic and your legal rights, see Nolo’s COVID-19 hub.

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