Social Security Tax Reduced for Employees in 2011

Millions of workers will see their take-home pay rise during 2011. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provide a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. This reduction applies only to the employee withholding amount. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.

The employer’s portion of the Social Security tax in 2011 remains at 6.2% of each employee’s first $106,800 of taxable earnings. There is no employer Social Security tax on any employee's earnings above $106,800 during 2011 (only Medicare tax).

Your payroll service provider should do this automatically. You will need to address this if you do payroll in-house. Let us know if you need assistance or have any questions.

Please contact Feeley & Driscoll's Boston Tax Firm by Email or call us at 1 (888) 875-9770.

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