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Saturday, December 18, 2010

New Tax Bill Not Totally About Extension of Prior Acts

For persons whose W2 wages will be less than $106,800 for 2011, the recently signed tax bill reduces the employee share of social security tax to be withheld from 6.2% to 4.2%.  For the self-employed the reduction is to 10.4% of self-employment income up to the threshold.  The reduction for wage-earners amounts to $2,136 for persons earning $106,800.  For a person earning $50,000, withholding tax would be reduced $1,000.  The bill makes no change in the Medicare portion of Social Security taxes.

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