Do you hear that? It’s the sound of your employees breathing a collective sigh of relief.
The income tax cuts implemented by the George W. Bush administration will be extended through 2012, once President Obama signs the extension both the House and Senate just passed.
The proposal to extend the tax holiday that has employees paying 2% less into Social Security was passed by a vote of 293 to 132 in the House and 60 to 36 in the Senate.
President Obama has said he would sign such a proposal if one made it through Congress.
Big relief for workers
The impact on the average worker is significant. If the Social Security tax was allowed to climb back up to its old rate of 6.2% from the current rate of 4.2%, it would cost the average worker $934 per year.
The tax holiday was originally set to expire at the end of 2011, but Congress extended it just before that happened. It was widely considered by lawmakers an unwise move to hit Americans with what amounts to a significant tax increase while the country tries to pull itself out of economic turmoil.
However, the extension comes with a hefty price tag. The Congressional Budget Office estimates it’ll cost $93 billion though the end of 2012.