Payroll Tax Cut to Boost Take-Home Pay in 2011
The recent tax cuts passed this week by the House and Senate, and to be signed by President Obama today, will implement a payroll tax cut reducing the Social Security tax withholding rate from 6.2% to 4.2% of wages paid. This reduction will have no effect on the employee’s future Social Security retirement benefits, provided they are still available then, but will allow for more immediate take home money now.
The IRS has released new withholding details for employers on their website, IRS.gov.
Employers should start using the new withholding rates as soon as possible in 2011, but not any later than January 31st, 2011.
The other benefits of the tax measure would extend existing tax cuts for families at every income level and renew jobless benefits for the long-term unemployed.
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