For 2011, beginning with the January 7th paycheck, employees may notice changes to their tax withholdings. Based on the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 there will be a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid, up to wages of $106,800. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits. Also, based on new IRS Federal Tax Withholding Tables, employees may have increased federal withholding taxes.
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