Here's Why You Could See Your Take-Home Pay Increase Next Month

Starting in September, many Americans could see their take-home pay increase.

The payroll tax relief program is scheduled to start on September 1. Under this program, a portion of income tax set for Social Security on an employee's paycheck that is usually withheld by their employer won't be anymore.

During this "holiday" period, you could see an increase of $100 (or more) on your paychecks. This would be a great help to Americans currently struggling from paycheck to paycheck during the COVID-19 pandemic.

In order to be eligible for the tax relief program, you must earn no more than $4,000 every two weeks, for a maximum of $100,000 per year. It's unclear right now how the tax break will affect self-employed workers and contractors.

The nation's 38 million unemployed people would not be eligible.

There are a few other catches:

Your paycheck increase isn't guaranteed. It'll be up to employers to decide what to do with the excess funds.
The tax break isn't a forgiveness of taxes, and will still have to be paid back on when you file your taxes next year.

"Employers are gonna have to come up with the money, one way or another," Samantha Jacoby, senior tax legal analyst at the Center on Budget and Policy Priorities told CNet.com. "They might take the entire deferred tax from one paycheck at the end of the year, for example, which would likely surprise a lot of people who think they got a tax cut."

The payroll tax break would see about $139 billion less contributed to Social Security.

According to the executive memo, the payroll tax holiday will start on Sept. 1 and last until Dec. 31.