Social Security Tax Rate Reduction Extended Through December 31, 2012
February 22, 2012
The 2% Social Security tax rate reduction (from 6.20% to 4.20%) has been extended by Congress through December 31, 2012. The tax rate reduction had been in effect for 2011, and then temporarily extended through February 29, 2012. This reduced Social Security withholding will have no effect on employees' future Social Security benefits.
The Social Security wage base, the amount of an employee's salary that can be taxed for Social Security purposes, has risen from $106,800 in 2011 to $110,100 for 2012. This means that the first $110,100 of an employee's wages are taxable for Social Security purposes. An employee's entire salary is taxable for Medicare purposes.
Through December 2012, the employee and employer tax rates for Social Security (full FICA) will be 5.65% (4.20% Social Security plus 1.45% Medicare) for wages up to $110,100. All wages over $110,100 are subject only to the 1.45% Medicare rate. The rate remains at 1.45% for those who are subject only to Medicare.
Source: UW System Administration
Categories: Tax