{"id":4669,"date":"2010-12-17T17:05:31","date_gmt":"2010-12-17T22:05:31","guid":{"rendered":"https:\/\/old.visionpayroll.com\/kb\/?p=4669"},"modified":"2010-12-17T17:53:52","modified_gmt":"2010-12-17T22:53:52","slug":"question-of-the-week-how-does-the-2010-tax-act-affect-payroll-taxes-in-2011","status":"publish","type":"post","link":"https:\/\/old.visionpayroll.com\/kb\/2010\/12\/question-of-the-week-how-does-the-2010-tax-act-affect-payroll-taxes-in-2011\/","title":{"rendered":"Question of the Week: How Does the 2010 Tax Act Affect Payroll Taxes in 2011?"},"content":{"rendered":"
\r\n\t\"How<\/a>\r\n\t
How Does the New Tax Bill Affect Payroll Taxes in 2011?<\/div>\r\n<\/div>This week\u2019s question comes from Matt, a company president. I know the tax bill has passed the Senate and House and that President Obama has signed it. How does the new tax bill affect payroll taxes in 2011? Answer: The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Act) should give many employees an increase in their take home pay starting with their first check in 2011.<\/p>\n

Social Security Withholding to Be Reduced To 4.2%<\/strong><\/p>\n

The biggest impact many employees will see is the reduction of Social Security withholding from 6.2% to 4.2%. According to the Internal Revenue Service (IRS)<\/a> in Notice 1036<\/a>, \u201cEmployers should implement the 4.2% employee social security tax rate as soon as possible, but not later than January 31, 2011. After implementing the new 4.2% rate, employers should make an offsetting adjustment in a subsequent pay period to correct any overwithholding of social security tax as soon as possible, but not later than March 31, 2011.\u201d The new law also maintains the income-tax rates that have been in effect in recent years.<\/p>\n

Making Work Pay Credit Set to Expire<\/strong><\/p>\n

The Making Work Pay credit<\/a> expires on December 31, 2010. As a result:<\/p>\n