Temporary reduction in payroll taxes

On December 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011.  Included in the Act is a provision that temporarily reduces the Social Security withholding rate from 6.2% to 4.2% for the first two months of 2012.  This change is effective with paychecks (and direct deposit) issued on or after Jan. 1, 2012. 

Because the law was enacted so close to the end of the calendar year, the IRS has given employers until January 31, 2012 to implement this withholding change.  For most University of California campuses, the new withholding rate will become effective with the first pay date after Jan. 3, 2012.

More information here.