Tax Cut Extension

Payroll Tax Cut Temporarily Extended into 2012
The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the
two percentage point payroll tax cut for employees, continuing the reduction of
their Social Security tax withholding rate from 6.2 percent to 4.2 percent of
wages paid through Feb. 29, 2012. This reduced Social Security withholding will
have no effect on employees’ future Social Security benefits. Employers should
implement the new payroll tax rate as soon as possible in 2012 but not later
than Jan. 31, 2012. For any Social Security tax over-withheld during January,
employers should make an offsetting adjustment in workers’ pay as soon as
possible but not later than March 31, 2012.