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. Roberts says:

    The trustees of the system publish an annual report. That report tells you everything you need to know. The unfunded liabilities of the program total more than $80 trillion. These liabilities cannot be met and will eventually be defaulted upon.

    The problem with SS is it is a generational ponzi scheme. Baby boomers pay the bennies for their parents, gen X for baby boomers, etc. When the program started there were 40 persons working for each one getting bennies. Now there are 3 persons working for each person collecting. It’s going to get to 2-1 and worse. The FICA tax rates necessary to sustain the program are eye popping. When current 18 year olds are 50, 25-30% of their wages will be needed to pay out bennies.

    Everyone might as well come to grips with reality right now. The program will collapse.

  2. Charles Osterloh says:

    Taking money away from social security is stupidity at its greatest. Then you tell people that social security is going bankrupt!!
    when there has been more coming in than was going out. How stupid does the goverment think the voting public is. The problem is the goverment is run by attorneys!!

  3. EmeraldPawn says:

    I think government should seek legislature that would allow a wage earner the opportunity to work over 40 hours a week with no state or federal taxes, no FICA or medicare at all. This way we all pay our share and for those that are not satisfied with being tossed a bone by the government can do something about paying off their personal debt, help their parents out or just save it. Thats not a gimick, thats a incentive.

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