After avoiding a last minute coup in the Senate, the payroll tax cut extension is on it’s way to the President’s desk. Some Senators, led by Steny Hoyer (D-MD), had threatened a last minute halt to the payroll tax cut extension because it is partially paid for by requiring new federal employees to up pension contributions from .8% to 3.1%. But in the end, the Senate got the 60 votes necessary to pass the bill. Here are the details.
The payroll tax will stay at Employee Social Security rate of 4.2% and the Employer rate will remain at 6.2% for the rest of 2012. Some additional good news is that the employee and the employer will not have to determine a difference from the first two months of the year and then change to a different rate for the remaining ten months of the year. Administratively the extension is great all around for businesses and employees, as the extension will reduce the likelihood of payroll reporting errors.
We will keep you posted on the status of the bill if it changes, but for now it looks as though it will be signed by the end of the day. If you have any questions regarding the payroll calculations for your company or employees, please don’t hesitate to call.