Payroll Tax Relief and What it Means to YOU

If you haven’t heard, President Obama signed a new tax bill last week. One of the items that will affect all employees is the 2% point reduction in an employee’s share of Social Security portion of the FICA Tax, from 6.2% to 4.2%. What exactly does that mean for you?
The table below illustrates the change and savings. FICA limits are currently adjusted for inflation and are currently set at $106,800. The tax savings is currently only available for 2011.


Pay             2010 Tax (6.2%)     2011 Tax (4.2%)     Savings


$30,000      $1,860                    $1,260                     $600
$50,000      $3,100                    $2,100                     $1,000
$80,000      $4,960                    $3,360                     $1,600
$100,000    $6,200                    $4,200                     $2,000
$106,800    $6,621                    $4,485                     $2,136


This is a huge opportunity for every employed person to increase their 401k contributions or contribute to an IRA or a Roth IRA in 2011.  This is FREE money, folks.  Using it for retirement is a very wise move. 


Please call me if you need more information or want to take advantage of the extra money in your pocket by smart retirement investing.