PHG CPAs - Sandy UT
The payroll tax holiday reduced the employee-share of Old Age, Survivors and Disability Insurance (OASDI) taxes from 6.2 percent to 4.2 percent for calendar year 2012 up to the Social Security wage base of $110,100. The wage base for 2013 will rise to $113,700. Self-employed individuals benefit from a comparable rate reduction for calendar year 2012.
IMPACT.
A two percent payroll tax cut in 2013 would amount to $2,274 in savings for all wage earners at or above the $113,700 wage base.
On the campaign trail, President Obama did not specifically call for extending the payroll tax holiday for another year. However, some Democratic leaders in Congress have said that the payroll tax holiday should be extended. It is unclear at this time if President Obama will push for an extension of the payroll tax cut, or an equivalent substitute, as part of a year-end tax package. (Salt Lake City Payroll)