A taxpayer might notice an increase to their paycheck this coming tax season. It happen because new tax legislation has been approved last January 1.
For employees, this is the opportunity to reduce their Social Security tax rate from 6.2 percent up to 4.2 percent.

This new Social Security tax rate will replace the Making Work Pay credit, where it can reduce the income tax withholding and can offer a maximum of $400 credits. Several taxpayers want to receive their benefits every end of the year rather than decreasing every paycheck. The new tax law doesn’t have the right to manipulate your tax payments. In addition, a 2 percent raise for employees will be expected on this 2011.
But unfortunately, this will not take effect to the employers and still they need to pay the Social Security rate of 6.2 percent. This new legislation was design for employees only.

There’s a highlight on this new tax law where I believe most employees never consider during tax planning. Several taxpayers are aware how they can minimize their income taxes using deductions like mortgage interest, charitable donations, and property taxes etc. But sad to say there are few taxpayer who consider the importance of hidden tax on Social Security as well as Medicare. These taxes contain 7.65 percent on the paid gross amount. Since it’s already 2011 it will become 5.65 percent.