Two days before Christmas, a divided Congress finally reached agreement on a bill (H.R. 3765) to extend the 2 percent Social Security payroll tax cut, federal emergency unemployment insurance benefits and other expiring programs through February 29 of this year.
The temporary extension maintained the 4.2 percent payroll tax paid by employees – which had been from 6.2 percent in 2011 to spur the economy.
President Obama and Members of Congress have agreed that the payroll tax should be extended for the entire 2012 year but have not agreed on how to fund the extension. A congressional conference committee will begin meeting next week to craft a longer extension of the payroll tax reduction and unemployment benefits.