I did not know about this new Social Security tax cut for 2011 where there was a 2% tax cut from our payroll taxes from our total taxable income. The Social Security tax was 6.2% but for 2011, it was dropped to 4.2%. I recently found this out because I noticed my weekly paycheck increased all of sudden. It turns out Fed OASDI/EE, which I was paying 6.2%, was not being deducted from my paycheck. If you also did not hear about the new 2% tax cut, you should check your pay stub immediately. You should not be paying more than 4.2% of your total 2011 taxable income.
In my situation, it looks like I already paid my 4.2% in total Social Security tax for this year because my paycheck increased by about 6% in October. Depending on your annual income, this can be decent amount of money. If your salary is $75,000, then you would be getting an extra $1500 in 2011. So what are you planning to do with this extra cash? I know I will be using most of my extra income to pay off my loans. How about you? By the way, don’t expect this Social Security tax cut to continue into 2012 as it is a short-lived benefit. The companies will go back to deducting 6.2% on Fed OASDI/EE from our paycheck next year. I did also confirmed that this reduced Social Security tax will have zero effect to our Social Security benefits during your retirement, which is a good news.