News & Resources

Lower Payroll Tax Rate Means More Take-Home Pay

Payroll Tax Cut and New Withholding Rates for 2011 are Now Available

Millions of employees will have more take-home pay in 2011 because the Tax Relief Act provides a payroll tax cut of two percentage points. This will reduce the Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. But this reduced rate will NOT affect the employee's future Social Security benefits.

The new law keeps in place the income-tax rates that have been in effect for the past few years.

The IRS realizes that the late date of these changes in the law will make it difficult for many employers to quickly update their withholding systems. The IRS is asking employers to adjust their payroll systems for January 2011 as soon as possible, but not later than January 31, 2011. The new withholding tables can be found on the IRS website.

The employer rate will remain at 6.2 percent.

Please contact our tax professionals if you have questions about this, or any other tax issues. Call us at 877.517.6872.