Extension of Payroll Tax Cut

House G.O.P. Leaders Agree to Extension of Payroll Tax Cut

Congress Passes Temporary Payroll Tax Deal

The President is expected to sign the deal soon.  The Senate will appoint members of a House-Senate conference committee to negotiate legislation to extend both benefits through 2012.

Under the deal, the employee’s share of the Social Security payroll tax will stay at the current level, 4.2 percent of wages, through Feb. 29. In the absence of Congressional action, it would revert to the usual 6.2 percent next month. The government will also continue paying unemployment insurance benefits under current policy through February. Without Congressional action, many of the long-term unemployed would begin losing benefits next month.

In addition, under the agreement, Medicare will continue paying doctors at current rates for two months, averting a 27 percent cut that would otherwise occur on Jan. 1.

The new deal makes minor adjustments to make it easier for small businesses to cope with the tax changes and prevents manipulation of an employee’s pay should the tax cut extension fail to go beyond two months.

 If you have any questions or concerns regarding the continuation of the payroll credit, please give us a call (208) 265-5959.