What does a drop from 6.2% to 4.2% in the tax that pays for Social Security mean to your paychecks?
It’s really pretty simple. Take your gross pay, reduce it by the amount you divert to flexible spending plans for medical and/or child care costs (since that money isn’t hit by the payroll tax) and multiply the result by 0.02. That will tell you how much your paycheck will go up starting in January.
Don’t trust yourself (or don’t want to spend the time) to do the math yourself? Then just use our new calculator: What the 2011 Tax Cut Is Worth to You.
The table below will give you quick look at what the payroll tax change -- part of the deal to extend the Bush-era tax cuts -- is worth at various salary levels. Once annual pay passes $106,800, the value of the tax cut stops rising. That’s because the part of the payroll tax that pays for Social Security applies only to the first $106,800 of income.