Payroll tax cut to end next year

last updated 8 January 2015

Millions of middle-class Americans will likely pay an average of $1,000 more in taxes next year, after the temporary payroll tax holiday ends on Dec. 31. Leaders of both political parties agree that the restoration of the tax, which funds Social Security, is necessary, and that the economy, while still fragile, can withstand a predicted 1 percent drag on growth. The tax holiday was passed last year to stimulate consumer spending during a weak recovery, reducing workers’ Social Security taxes on wages up to $110,100 to 4.2 percent, from 6.2 percent. This translated into $700 in savings for a person making $35,000 a year and $2,202 for workers making over $110,100.