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 February 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 January 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. Employers and payroll companies will handle the withholding changes, so workers should not need to take any additional action.
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