Good News for Employees, Payroll Tax Cut to be Extended
Posted by Michael Beauchemin on Fri, Feb 17, 2012 @ 10:00 AM
Their is some good news for taxpayers. Congress has come to an agreement on the payroll
tax and this week will likely pass an extension of the payroll tax cut through the end of 2012.
We first posted information about the Payroll tax cut last January. The payroll tax cut was originally implemented in January, 2011 as part of the Job Creations Act, passed in December, 2011. As part of that law, the Social Security tax for employees was reduced from 6.2% to 4.2% for one year. The rate for employers was left unchanged at 6.2%.
This past December a two month extension of the payroll tax cut was passed. It was set to expire on February 29, 2012. The latest compromise in Congress will extend the tax cut through December 31, 2012.
Last month we posted an article on payroll changes for 2012, that can be found here. Employees, in 2012, will have their paycheck reduced by 1.45% for the Medicare tax, 4.2% for the social security tax and by whatever amount is withheld for federal income taxes. For those that work in states or locales with with either state or local income tax, they will have their check further reduced by those taxes as well.
In addition to Congress working out a compromise on the payroll tax cut extension, they will also be extending jobless benefits. A provision that prevents a pay cut for doctors of Medicare patients is also included.
For additional information about payroll taxes, download our Payroll Tax Guide Summary for 2012.
