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Congress Finalizes Extension of Payroll Tax Holiday

by Breedlove February 16, 2012

Late yesterday, a House-Senate committee finalized a deal to extend the payroll tax holiday through the end of 2012.  (The payroll tax holiday is a temporary reduction in the employee's portion of the Social Security tax from 6.2% to 4.2%.  Combined with the 1.45% Medicare tax, the combined FICA tax for employees is 5.65% -- rather than the usual 7.65%).

 

The reduced Social Security tax has been in effect since the beginning of 2011, but without a Congressional deal, the holiday would have been discontinued at the end of February.

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