Payroll Tax Holiday Extended Through 2012
On February 22, the president signed the Middle Class Tax Relief and Job Creation Act of 2012 to extend the payroll tax holiday for employees through the end of 2012. The two percent recapture tax provision for high-income employees is repealed and does not apply.
The payroll tax holiday extension ensures that the employee social security rate will remain at 4.2% through December 31, 2012. We have updated our processing to reflect the tax rate remaining at 4.2% for remainder of this year.
The IRS has released revised Form 941 allowing employers to properly report the tax cut. The IRS will re-release the 2012 W-2 and W-3 instructions within the next week. Paycor will continue to closely monitor the payroll tax holiday legislation and will relay updates as we approach 2013.