Possible Federal Payroll Tax Rate ReductionsAugust 28, 2019 Alert
Reports indicate the beginning of White House discussions on strengthening the economy including the possibility of reducing federal payroll tax rates.
AT A GLANCE
- News reports indicate there have been White House meetings to discuss the current economy and the possibility of reducing the federal payroll tax rate.
- The most recent legislation to reduce the federal payroll tax rate extended the Temporary Payroll Tax Cut Continuation Act of 2011 in 2012 under the Obama administration.
- The White House has not released any proposed legislation reducing the federal payroll tax rate.
White House Considers Payroll Tax Cuts to Bolster the Economy
Recent news reports indicate the beginning of White House meetings to discuss strengthening the economy with one of the possibilities being the reduction of federal payroll tax rates. The term “payroll tax” encompasses Social Security and Medicare. Current legislation established Social Security at 6.2% of annual wages up to $132,900 and Medicare at 1.45% with no wage limit. Both are collected from employers and employees.
According to the United States Senate Committee on Finance, similar legislation was enacted to stimulate the economy in 2012. The Middle Class Tax Relief and Job Creation Act of 2012 provided an extension of the Temporary Payroll Tax Cut Continuation Act of 2011, which reduced the employee side of Social Security to 4.2% from 6.2%. This extension also provided $1,000 of additional revenue into the typical American household.
At this point, the White House has only expressed that this could be one of many tax cuts they are considering as a way to bolster consumer spending amid the current economy. There has been no indication that the President has presented any proposed legislation to Congress that would reduce the current payroll tax rates.
Paylocity is actively monitoring this situation and should the federal government consider any legislation involving payroll tax cuts, we will provide detailed updates as soon possible.
Thank you for choosing Paylocity as your Payroll Tax partner.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.
Date Posted: August 28, 2019