Payroll Tax Cut Runs through the End of 2012

Just before the Presidents’ Day holiday, Congress passed an extension of the 2-percentage-point reduction in Social Security taxes paid by workers. The cut had been set to expire on February 29, 2012, but will now run through December 31, 2012. The cut applies only to the employee share of Social Security taxes within FICA and the employee portion of Social Security taxes within the self-employment tax for self-employed individuals. The employer share of Social Security tax remains unchanged.

The recapture rule that had been set to apply for anyone earning more than $18,350 within the first 2 months of 2012 has been eliminated.