Recent Legislation Cuts Payroll Taxes For Most Workers

Recent legislation cuts employment taxes for most workers by 2%. For employees, the payroll tax cut applies to wages received in 2011. For self-employed individuals, the self-employment tax cut applies to self-employment income earned in 2011 (for calendar year taxpayers). The legislation also extends an income tax credit for certain employers.

President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act) into law on Dec. 17, 2010. The law provides many benefits to employers and employees, as well as other Americans. Among other things, the Tax Relief Act provides a payroll tax holiday for employees, and extends an income tax credit for certain employers.