Millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2% to 4.2% of wages paid. According to Todd Feltner, partner at HintonBurdick CPAs & Advisors, “This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.”

As always, however, the IRS urges workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer. For example, individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms. For more information on adjusting withholding, taxpayers can consult IRS Publication 919, “How Do I Adjust My Tax Withholding?”