On Dec. 17, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, a broad piece of legislation that addresses a slew of tax issues, many that affect HR.
The centerpiece of the legislation—an across-the-board extension of the “Bush tax cuts” enacted in 2001—means employers won’t have to adjust federal tax withholding on employee paychecks.
Those tax rates were scheduled to expire on Dec. 31, 2010. Without the law, the average employee would have paid about $3,000 more in federal income taxes next year.
Note: Employers don’t have to take any action as a result of the extension of current tax rates.
A break on Social Security taxes
However, another part of the new law means that most employees will see their take-home pay increase in 2011. The law created a one-year “payroll tax holiday” by lowering employees’ share of Social Security withholding to 4.2%.
The 2011 Social Secu...(register to read more)