New Law Keeps Payroll Tax Cut In Place Through February Of 2012

On December 23, after a grinding, down-to-the-wire battle, Congress passed H.R. 3765, the "Temporary Payroll Tax Cut Continuation Act of 2011" (the TTCA). The bill was signed into law by President Obama shortly thereafter. The tax provisions of the TTCA consist of a two-month temporary extension of the payroll tax cut that's in place for 2011, plus a parallel extension of a lower Self Employment Contributions Act (SECA) tax rate on self-employment income.

Nearly 160 million workers will benefit from this extension which continues the reduction of their Social Security tax rate from 6.2 percent to 4.2 percent of wages paid thru February 29, 2012. This reduced Social Security withholding will have no effect on employees' future social security benefits.

For more information visit the http://www.irs.gov/newsroom/article/0,,id=251650,00.html?portlet=108