The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Act) reduces the social security tax withholding rate from 6.2% to 4.2 % effective with payments made after December 31, 2010.
Transfers To Federal Old-Age And Survivors Insurance Trust Fund
According to the 2010 Tax Act, “There are hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) amounts equal to the reduction in revenues to the Treasury by reason of the application of subsection (a). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had such amendments not been enacted.”
Reduced Withholding of Employees Portion Will not Impact Future Benefits
This reduced social security withholding will have no effect on an employee’s future social security benefits.
Contact Vision Payroll for Further Information
Vision Payroll will be providing further information on the impact of the 2010 Tax Act.