A couple of years ago, in an effort to stimulate the economy, Congress passed a payroll tax cut. Even though the tax cut was set to expire at the end of last year, an extension means that the payroll tax cut is good through the end of 2012.
As the end of the year approaches, it is clear that the situation is about to come to a head. Hardly anyone is talking about the upcoming expiration of the payroll tax cut, which reduced the employee side of the FICA/Social Security tax to 4.2% from 6.2%. For many people, that didn’t make a huge difference in a paycheck. For example, someone making $50,000 a year has been saving about $1,000 a year. On average, that amounts to slightly more than $19 per week.
Many workers probably don’t even realize that they are enjoying a tax break right now, and that means that it will come as something of a shock come 2013 when the paycheck is a little bit lower.
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