In December 2010 President Obama signed into law the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act,” also referred to as the Tax Relief Act of 2010. One of the key provisions of the Act was a reduction in the FICA tax rate paid by employees from 6.2% to 4.2%. This change resulted in more take-home pay each pay period in 2011. The reduction in the FICA tax rate was only for 2011.
Late last month the “Temporary Payroll Tax Cut Continuation Act of 2011” was passed by Congress. The Act temporarily extends the two-percentage point payroll tax cut for employees, continuing the reduction of their FICA tax-withholding rate from 6.2% to 4.2% of wages paid through February 29, 2012. Indications are Congress would like to extend the FICA rate reduction throughout all of 2012, providing they can agree on a way to pay for this temporary tax cut. We’ll continue to monitor this situation and will keep you informed.
Questions may be directed to Steve Jordan, Payroll Specialist, at ext. 14908 or Michelle Westcott, Payroll Specialist, at ext. 14422.
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