By Robert Loe | Published: January 8, 2011 – 3:25 pm

Whether you’re rich or poor, Congress was thinking about you when they passed the Tax Relief Act of 2010.

There is something in this act for all income levels. Uncertainty remains over future tax rates which will return in two years when the Bush tax cut extension expires.

• A one-year 2% reduction in the employee portion of Social Security (FICA) tax from the previous 6.2% to 4.2% took effect on January 1, 2011. It is not subject to any phase-out based on income and will benefit all wage earners. This is the first time that Congress has ever lowered the FICA tax rate.
• The investor-friendly 15% tax rates on dividends and long-term capital gains that were to have ended on December 31, 2010 have been extended for an additional two year for all income levels.
• A temporary 13 month extension of unemployment benefits was included in the bill.
• The Act extended the tax rates that were in effect during 2010 for two additional years. The rates had been scheduled to revert from their 2010 levels of 10, 15, 25, 28, 33 and 35% 15, 28, 31, 36, and 39.6% on January 1, 2011.
• The issues of the national debt and budget deficit were not addressed by the Act and will likely be addressed by future legislation.

For a more detailed summary of the Tax Relief Act of 2010, please go to this link:   www.paychex.com/regulations/

Filed under: Changes in Federal Taxes