Temporary Payroll Tax Cut Officially Extended Through 2012

The Payroll Tax Cut Extension, originally set to expire February 29, 2012, has been extended through the end of 2012, following a February 15 congressional agreement. President Obama signed the bill into law on February 22, part of which repeals the recapture provision that was originally part of the two-month extension

The extension keeps the payroll tax rate at 4.2%, normally 6.2%, through the end of the year. The law is estimated to save the average American family around $40.00 per two-week paycheck, or approximately $1,000 annually. The payroll tax cut is said to affect 160 million Americans.

Long-term unemployment benefits were also extended through 2012. Stipulations were added to gradually decrease the maximum numbers of weeks for recipients. A provision was also added to the bill to authorize states to drug test unemployment beneficiaries was added. The drug tests are only required for people who were fired for unlawful use of controlled substances.

Read more information on five important takeaways from the original payroll roll tax extension.

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