Social Security Payroll Holiday Extension Update
On Friday, December 23, the Temporary Payroll Tax Cut Continuation Act of 2011, a 2-month extension of the payroll tax cut was signed. This means the employee social security rate will remain at 4.2% through February 29, 2012. Paycor has updated the tax rate to 4.2% for January and February 2012 processing.
The law also includes a new provision affecting employees who receive more than $18,350 in wages during January and February. The provision imposes an additional income tax amount equal to 2 percent of the amount of wages they receive during this time period; the additional 2.0% will cap at $110,100. This additional tax is an add-on to tax liability that the employee would otherwise pay for 2012. The tax will be payable in 2013 on the employee’s 2012 income tax return.
We continue to closely monitor this legislation and will relay any additional updates.