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Increase in Take-Home Pay

January 11, 2011, Volume 57, No. 17

President Barack Obama signed into law a huge tax bill extending cuts for all Americans on Friday, December 17, 2010. The package retains the Bush-era tax rates for all taxpayers. 

Millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees, reducing the employee share of social security tax from 6.2% to 4.2% for the first $106,800 of wages paid in 2011. The maximum that can be withheld will be $4,485.60, a $2,136 decrease from the 2010 maximum of $6,621.60. Employers will continue to pay the full 6.2% of their employees’ covered wages paid in 2011 for their share of social security taxes.

For additional information visit the Internal Revenue’s website at www.irs.gov or call 1-800-829-1040.

—Terri Pineiro, Director of Payroll and
Individual Disbursement Services

Related: 2011 Tax Treaty Applications

Almanac - January 11, 2011, Volume 57, No. 17