Payroll Tax Holiday
Prior to the 2010 Tax Relief Act, individuals would have had to pay Social Security tax of 6.2% in 2011 on wages up to $106,800, with the employer paying the same amount. Self-employed persons are subject to taxes of 12.4% for social security. Due to the 2010 Tax Relief Act, the employee, not employer, portion of the tax is reduced from 6.2% to 4.2% for 2011, with the maximum amount of wages subject remaining at $106,800. This could result in savings of up to $2,136 per individual. Those individuals who are self-employed will also receive the 2% tax reduction. The Joint Committee on Taxation estimates that the cost will total $111.7 billion. The “Payroll Tax Holiday” has no income limitation, meaning all workers who are subject to social security taxes will receive a benefit. Although this benefit is not for businesses, tax incentives were enacted in March 2010 for potential payroll tax savings.
If you have any questions or would like more information, please contact Wood, Atter & Wolf, P.A., in Jacksonville and Ponte Vedra Beach, Florida.
