The Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut...
The Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees. This reduces the employee Social Security tax withholding rate (which appears on our checks as OASDI/EE) from 6.2% to 4.2% of wages paid. The employer portion (which appears on checks as OASDI/ER) will remain at 6.2%. This means NDSU will continue to contribute the same amount towards Social Security but employees will contribute less. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.
Undergraduate and graduate students enrolled at half time do not have Social Security or Medicare tax withheld from their checks and therefore will not notice this change.
Employees may also see their federal income tax withholding increase because the Making Work Pay credit expired at the end of 2010. IRS tax withholding tables were changed to eliminate the credit that had been built in for the 2009 and 2010 calendar years.
The above changes in tax withholdings may result in an increase in net pay, beginning with the January 14th payroll, depending on your tax liability.