2011 Social Security Tax Break

Part of an extensive tax cut package signed into law last December 17th is a new tax break on social security taxes.  Previous to January 1st 2011, a social security tax of 6.2% was taken from workers yearly wages.  With the signing of this tax cut package social security taxes have dropped to 4.2% per yearly income.  To put in in perspective, this tax cut will drop the amount of tax taken out of your paycheck from $6.20 per $100 of wages to $4.20 per $100 of wages.  Workers who claim the Making Work Pay Credit, which allows for up to $400 to an worker making less than $75000 or up to $800 for an employed couple making less than $150000 will only see the difference from this social security tax break above the Making Work Pay credit.

Long story short:  you may, or may not, have noticed a barely noticeable increase in your paycheck.