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SKR+Co Alert: Payroll Tax Changes
January 17, 2012
Congress extends payroll tax relief – for 2 months
After much debate and political maneuvering, Congress has passed a two-month extension of payroll tax relief. The Temporary Payroll Tax Cut Continuation Act of 2011 will extend through Feb. 29, 2012, the 2010 Tax Relief act provision that reduced the employee portion of the Social Security tax on earned income from 6.2% to 4.2%. The 4.2% rate is limited to remuneration paid in January and February of $18,350 (maximum FICA wage base of $110,100/12 x 2).
The Senate had passed a previous version of the act Dec. 17, but that version couldn’t garner enough votes in the House. In negotiations with Speaker of the House John Boehner, Senate Majority Leader Harry Reid agreed to appoint conferees to work with House conferees on a full-year extension. In addition, the House added language to the Senate’s version of the Continuation act to allow employers to avoid certain compliance challenges that otherwise could result from the temporary extension.
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2012 Tax Tables
Federal Withholding Tax Tables
Colorado Unemployment Insurance Change
Effective January 1, 2012, the Colorado Unemployment Insurance wage base has incresaed to $11,000 from $10, 000 per employee.
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