Social Security withholding rate reduced in 2011
Monthly paid employees will notice a change in their February 1 paychecks due to reduced Social Security withholding.
On December 17, 2010, President Obama signed into law the Tax Relief Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Included in the Act is a provision that reduced the social security withholding rate from 6.2% to 4.2% for 2011. This change is effective with paychecks (and direct deposit) issued on or after January 1, 2011.
For UCOP employees, the new withholding rate became effective with the Bi-weekly pay date on January 5, 2011.
Because the change was not implemented in time to affect the January 3, 2011 paycheck, monthly employees paid on that date were subject to social security withholding tax at the old rate (6.2%). Employees will be refunded the difference in their next paychecks. As a result, most people will notice a one-time increase in their net pay from this adjustment.