Snyder and Associates

Tax Byte

"Payroll Tax Holiday" Extended

Both the House and Senate passed the payroll tax bill on Friday, February 17th, just before the holiday weekend. The bill keeps the employee's Social Security tax rate at 4.2% for the rest of 2012. Without this action, the rate would have increased back to the pre-2011 rate of 6.2%, for payroll paid after March 1, 2012. The rate for employer's portion of the social security tax did not change in 2011 and continues to be 6.2%

Had this not been extended, all employees would have essentially taken a pay cut, something neither the Republicans nor the Democrats wanted in an election year. For employers, the passage of the bill saves the cost and complexity of changing the payroll deduction rate mid-year, something none of us were looking forward to.

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