Social Security Tax Rate Reduction Extended Through February, 2012
January 8, 2012
The 2% Social Security tax rate reduction (from 6.20% to 4.20%) that was in effect for 2011 has been extended through February 29, 2012. The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the 2% payroll tax cut for employees. 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 February, 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