The 2011 Stimulus Check: 2% Payroll Tax Holiday

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Money Money MoneyWhen Congress passed an extension on the Bush tax cuts, it also passed a new one year tax “holiday” on your payroll taxes. I’m calling it the 2011 version of an old friend to many Americans, the stimulus check. Back in 2008, after the passage of the 2008 stimulus package, many Americans received $300 in the form of a stimulus check. In years since, that stimulus check has been morphed into the Making Work Pay credit (resulting in $400 per person).

For 2011, the stimulus check has returned and this time it’ll be called a payroll tax holiday with a benefit of up to $2,136 per person.

Payroll Tax Holiday

Right now, employees pay a payroll tax, also called FICA tax, of 7.65% on their first $106,800 of income. 6.2% goes towards Social Security (OASDI) and 1.45% goes towards Medicare. After their first $106,800, you only pay the 1.45% of Medicare (there is no limit) and not the 6.2% towards Social Security. For 2011, the percentage you need to pay towards Social Security, as an employee, will be reduced by 2%. For someone earning the maximum $106,800, it’s a reduction of $2,136. After you take out taxes, based on your tax bracket, the rest goes into your pocket.

The first stimulus check gave you $300, the next one gave you up to $400, and this one has the potential of putting over two thousand dollars into your pocket over the course of the year (minus taxes).

(Photo: Tracy O)

{ 90 comments, please add your thoughts now! }

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90 Responses to “The 2011 Stimulus Check: 2% Payroll Tax Holiday”

  1. Anonymous says:

    fed tax up ss tax down

  2. Gene says:

    fed tax goes up and ss tax goes down sounds like bs to me.

  3. Beetle Bob says:

    Someone out there please do your own math and stop relying on people like this author. Remember a year ago our FITW went down for 1 year and everyone got about $10-15 extra dollars per week? Probably not. Look it up, it happened. Now we get a 2% cut in FICA, BUT

  4. Eaglefan says:

    Let me get this straight. We get a 2% reduction in paying our social security; a system that is already broke? How are they ever going to make up for the lost input into the system…?

  5. Buster says:

    All the teachers at my school made $50 less per paycheck. That is $100 per month if married couples are teachers. That is $1200 per year pay CUT basically. No one can convince anyone that teachers (in Texas) are wealthy. So is this the “help” middle class is getting at a time when no one can pay their bills already?

  6. Rocki Rose says:

    My pension check is over $48/mo less this year than last year. No Making Work Pay involved. It’s a pension. So, why the big increase in taxes?

    • Jerry says:

      My pension check is $46/mo less this year than last. I apparently was receiving the Making Work Pay credit (until this year), on pension money.
      As Jim has pointed out, it’s not an increase in taxes. It is however, still a reduction in take home money. Pensioners are left out of the 2% payroll tax reduction so our bottom line is an increase in the amount of Federal Income Tax witheld in 2011 versus 2010!

  7. anomyous says:

    First I PAY INTO SS all of my working days and certain people spout out about how I am on Welfare. Now we have double speak about a ‘stimulus’ that is another give and take more. Am I or anyone else confused about this interesting administration, are we getting fed up,and what do we plan to do about it?

    Personally, I better burn up the lines, and cyber space between my Representatives in WA. And not necessarily through all of the mail that sends us surveys and money requests. This is supposed to in a Government of the People, By the People, For the People.

    I believe that it will work….IF we ALL make our wants known to our Representatives

  8. Gigi says:

    My situation is exactly the same as Jerry’s.-
    First of all…..FICA is not taken from a pension
    Next-yes the tax rate did not change, but the tax TABLES did…
    And-yes our $ amounts decreased just as much or more than everyone else’s per check (when you finally take your Roth IRAs & 401k s… you expect FICA & other things to be deducted?).
    And finally, many of us with pensions worked had other employment & paid into SS big time….but sorry, in Illinois & some other states you can’t collect a pension and SS …they call it double dipping.

  9. bobkat says:

    does this mean even if you didn’t have a job you will recieve the stimulus. Mom will be 84 and sure can use this, no raise eally hurts alot of the elderly. So what’s up with that. Everyone needs a break from taxes and the goverment lies, help those who really need it. I’ve been on workers comp myself and don’t see any relief for myself either. Is there really any help out there.

  10. muleman says:

    Jerry says it all about those on pensions. I dont`t think the Gov. thought about that. It`s not helping us at all. What agency would I need to contact?

  11. Nefi says:

    Solve one problem and dig a deeper hole for another one. The problems will just never end. What happened to planning for future.

  12. Adam says:

    Pensioners may cry at the change, but the intent of “Making Work Pay” was to give a tax break to those currently working. This 2% break is better than the $400 or $800 credit two years ago, so long as your 2% is greater than $400 or $800. The government is providing another incentive to work, kind of like how they provide incentive to work when you have children (EITC)

  13. walking wolf says:

    gone ogling around and it seems that SS and SSI recipients won’t be involved in the stimulus plan. just for those who work and pay taxes. is this really so? no check for the ‘ol wolf man? 🙁

  14. Amanda says:

    Is there a way to check on wheather or not a stimulas check has been applied for in your name? Because my family and I went to this tax lady who asked only for name ss# and birthdate- and check was supposed to come in 2 weeks. Its been like 7 and nothing-cant get aho;d of lady over the phone at all and she is never in her office when we go by.

  15. Sue says:

    Okay, I’m Canadian, and you can pick on me for that any which way, but I see what union and other employees get paid, not to mention their benefits, and I, as an unemployed university graduate, see how many perks and raises of employment can be rationalized in my mind as “free money”. You see, some people work very hard for a lot less pay and benefits, even with the same education. You can’t really say the well-paid deserve what they get, when you look at the big picture. Some of them are white collar crooks, some are blue collar crooks. How can we judge and compare salaries. Why does a rape victim have a harder time at an interview? and so on and so forth. You know what I mean. Take the blinders off.

  16. Jennifer C. Warren says:

    The one year tax “holiday” on your payroll taxes was indeed a stimulus check. These measures stimulate the economy. Additional steps must be pursued to stimulate the economy.

  17. MM says:


  18. Sagamore Tiberius Brown says:

    If the “Social Security Trust Fund” is being underfunded by a diminishing ratio of current contributors to current beneficiaries how can our congressmen justify the payroll tax holiday

    And better yet why can I not find within these comments that the matching employers contribution has or not has been lowered by 2%

    If it has then the contributions to a troubled fund have literally been
    double crossed

    A $23,000 exemption for receivers of Cadillac medical plans!!! that is tax free income !! political BS

  19. Teaspoon says:

    As I read all of these posts, it seems that it is not understood how this payroll tax reduction for 2011 works.
    In addition to federal, state, and local tax withholding, employees pay Social Security (OASDI) tax, of 6.2% on their first $106,800 of income (and nothing on earnings over $106,800) which as of Dec. 2010 was a max OASDI tax of $6,621.10, plus 1.45% of earnings towards Medicare (no cap).
    For 2011, the percentage you need to pay towards Social Security (OASDI), as an employee, has been reduced by 2% to 4.2% of earnings up to $106,800= $4,485.60. But, your employer must still pay the ER match per employee of 6.2% to the normal $6,621.10 maximum per employee.
    For someone earning the maximum taxable wage of $106,800 with the tax cap of $4,485.60 this year, instead of paying the normal $6,621.10 they simply will not pay any more OASDI tax after they hit $4,485.60 withheld, which is a total tax reduction of $2,136.
    However, for someone earning $40,000 they will never reach the max taxable wage amount to earn the maximum savings of $2,136. They receive the 4.2% reduced OASDI tax rate per payday, which will equate to a tax savings of $800 by the end of the year. So, if they are paid semi-monthly they would see a reduction in OASDI tax of $33.33 per paycheck for 2011.

  20. Bestthing says:

    Have this been passed?

  21. gen says:

    Ppl making 100+ a yr r obviously well off…so why would they deserve a stimulus……ppl who r working their butt off in this sad economy barely making $30,000 a yr deserve it n so do their kids and family. I think its embarrassing to even think of giving wealthy ppl free money!

    • lori says:

      Gen well said! I wish the government could get it together for us little nobodys in Illinois that are so far under we can breath, Because they tax the crap out of are gas and pay checks! Me and my husbund are very hard workers but we still when it comes down to finding witch bill to pay I sit down and cry! I just hope we get to have christmas!

    • lori says:

      Gen well said! I wish the government could get it together for us little nobodys in Illinois that are so far under we can breath, Because they tax the crap out of are gas and pay checks! Me and my husbund are very hard workers but we still when it comes down to finding witch bill to pay I sit down and cry! I just hope we get to have christmas!

  22. Anonymous says:

    My name is lori and I live in the midwest. I am married and have two kids. I work a full time job at the hospital during the day and my husbund works nights at a local factory. We penny pinch and save but still just get by on the bills. Money is one thing we don’t have alot of. We stay home mostly and shop at rummages. If we could just get a stimulus check this year, we would be able to put it in good use for are kids and bills. It would help so much! That is if everbody could just get it together!!!!!

  23. dustin says:

    So i’m one of the “lucky” people in our country that has already met the 106800 for the year. I have def gotten the 6.2% taken from my check. So do we get that 2% back as a refund or what? I could use it cuz Sallie Mae take 1800 a month from me… ugh oh Sallie…

  24. serenity says:

    I work at a small sewing factory. Our employer has deducted 6.2% for social security all year instead of the 4.2%. How can we get our money back? We’ve spoken to her about this, but she shows no concern about it.

  25. caly says:

    How can we raid the social security fund when we are concerned about it?????

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