Today, the payroll tax cut has officially been renewed for another two months thru February 2012.  Eventually, it is expected to be extended thru December 2012.

Originally introduced as a one-year tax cut for 2011, the tax cut reduces the employee’s FICA contribution rate from 6.2% to 4.2%.  As a result, an individual who earns $50,000 will pay $1,000 less in taxes over the course of the year.  An individual earning $100,000 will pay $2,000 less in taxes.