After lawmakers were unable to agree on whether to extend the reduced payroll tax rate for another full year, Congress approved a continuation of the two percentage point cut in the employee portion of the payroll tax, which had been set to expire at the end of 2011, through the first two months of 2012.

The Temporary Payroll Tax Cut Continuation Act of 2011 extends the 4.2% social security tax on wages through February 29, 2012. The employer portion of the payroll tax will remain at 6.2%, while the self-employed rate will be 10.4% through the end of February. The law also extends benefits for the long-term unemployed for two months and prevented a scheduled cut in fees paid to Medicare providers from taking effect January 1, 2012.

For more information, visit our “Tax Guide Online” and select “What’s New,” where further details are made available about the provisions of the new legislation. Our “Tax Guide Online” can be accessed through the homepage of our website, www.alloysilverstein.com.

We encourage you to visit our website today and often throughout the year. If you have questions on these or other topics, please contact us.

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