While Obama’s proposed Jobs Bill (the American Jobs Act) aims to get more people to work, it also includes a number of changes that Payroll should be aware of.
Here are three of those details:
1. Reduction of the social security tax. The Jobs Bill would essentially cut the employer portion of the Social Security tax in half — decreasing it to 3.1% on the first $5 million in Payroll. According to the White House, this change would benefit 98% of businesses.
2. End of the 6.2% payroll tax for certain organizations. The tax will be eliminated for companies that bump up payroll by adding new employees or increasing the wages of their current workers. The benefit is capped at the first $50 million in payroll increases.
3. Extension of 2011’s payroll tax holiday. The bill’s reduction of the employee portion of the Social Security tax comes out to around a $1,500 tax cut for any families that earn $50,000 annually.
For more details on the American Jobs Act, click.