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Payroll Tax Cut Finally Gets OK From House Republicans

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After a great deal of pressure from their own party, House Republican leaders finally agreed to a two-month extension of the federal payroll tax cut.

House Speaker John Boehner announced last week that the GOP would go along with the compromise bill that passed in the Senate.

What this means for employees is that their share of the Social Security payroll tax will remain at the current level, 4.2 percent, for two more months. Without congressional action, the employee's payroll tax rate will revert to the previous 6.2 percent after Feb. 29, 2012.

The bill also extends the payment of unemployment insurance benefits through February. This means that the government will continue to pay benefits to the long-term unemployed for an additional two months.

In addition, Medicare will continue paying doctors at the current rates for another two months, averting a 27 percent cut that would have gone into effect on Jan. 1. There are also minor adjustments with the intent of making it easier for small businesses to cope with the tax changes and preventing the manipulation of an employee's pay in the event that the tax cut fails to extend beyond February.

Want to know more? Read the full article by Tim Gould at HR Morning

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