PAYROLL TAX CUT EXTENSION PASSES
On February 22, 2012, the President signed into law the Middle Class Tax Relief and Job Creation Act. Under this new law, the payroll tax cut was extended until the December 31, 2012 which means that:
· For employees: the Social Security portion of the payroll tax will stay at 4.2% through the end of 2012
· Self-Employed persons: Self-employed individuals will pay 10.4% (4.2% employee portion plus 6.2% employer portion) on all self-employment income.
· For Both Employees and Self-Employed: Both will share in the 2% payroll tax cut extension up to the earnings cap of $110,000 for Social Security earnings.
· Recapture Provision repealed. The recapture provision included in the original 2 month extension has been repealed.