Payroll Tax for Employees Increasing in Janaury?
Posted by Michael Beauchemin on Fri, Aug 05, 2011 @ 07:27 AM
This past week, Congress passed, and President Obama signed into law legislation to raise the debt ceiling. While republicans were pushing for more spending cuts and Democrats were pushing for tax increases, one issue that was not included in the compromise was an extension of the temporary payroll tax cut for employees.
As we highlighted in a previous post, beginning in January 2011, the Social Security tax that employees pay through payroll deduction, decreased from the historic rate of 6.2% to 4.2%. This tax cut for employees was a temporary one-year tax cut and intended to try and help stimulate the economy.
There was an attempt, as part of the debt deal, to try and extend this payroll tax cut and keep the Social Security tax rate for employees at the 4.2% rate.
At this time, unless a separate bill is enacted or this temporary tax cut is extended as part of another bill, employees will see their take home pay decrease come January.
For more information about payroll taxes, and to learn about what employers and employees are obligated to pay, download our free Payroll Tax Guide Summary by clicking on "Download Now."
