Congress recently reduced the employee portion of Social Security taxes from the current 6.2% to a temporary rate of 4.2%, for 2011 only. The employer portion is the same at 6.2% and Medicare taxes remain at 1.45%. So, the total self-employment tax rate, which was 15.3%, is temporarily reduced to 13.3%, for 2011.
The Making Work Pay (MWP) credit that was available for tax years 2009 and 2010 was not extended under the new law.
The IRS has asked employers to adjust their systems as soon as possible, but no later than January 31, 2011. Many employees may not see these changes until their first paycheck in February 2011.