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February 17, 2012

On Friday, February 17, 2012, the U.S. Congress gave final approval to payroll tax cut legislation that extends a 2% payroll tax cut for 160 million U.S. wage earners until the end of 2012. President Obama is expected to quickly sign the legislation.

This past December, a short-term extension of the payroll tax cut was passed. However, Republicans at the time were demanding other spending cuts to pay for the continued payroll cut beyond the short-term extension. This week, however, the Republicans and Democrats compromised to produce the new legislation.

Under the measure signed by Congress, workers will continue to receive a two percentage point increase in their paychecks and people out of work for more than six months would keep jobless benefits averaging about $300 per week. It would also head off a steep cut in reimbursements for physicians who treat Medicare patients. The tax cuts go back to the Bush Administration.

Extending the 2% point cut in the 6.2% Social Security payroll tax would save around $80 monthly for someone earning $50,000 a year and give a maximum cut of $2,200 to high-end earners. 02.17.2012