Back in December, Congress voted to extend the 2011 reduction in the social security rate paid by employees (the 2% reduction those of us subject to social security tax have been enjoying) until February 29, 2012. Last Friday, they voted to extend this rate reduction for the remainder of 2012. The bill (full name: Middle Class Tax Relief and Job Creation Act of 2012) now goes to President Obama for his signature, which we fully expect to happen.
The Tax Relief Act of 2012 also repeals the 2% recapture tax for individuals that were paid more than $18,350 in January and February 2012, which was meant to keep those individuals from gaining more benefits from the temporary tax cut than those not paid more than that amount.
What does this mean for you? Basically, it means that the status quo remains the same. Your employees who are subject to social security tax will still see the same 2% tax reduction they have seen since January 2011. Be sure to thank your congressperson.