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.