NEW TAX LAW
SOCIAL SECURITY EMPLOYEE TAX RATE DECREASES FOR 2011

Thousands of postal employees will have their Social Security employee tax rate decrease 2 percent in 2011.

The tax reduction is a result of the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” signed into law Dec. 17, 2010.

The Act temporarily decreases the Social Security employee tax rate from 6.2 percent (of the first $106,800 in earned income) to 4.2 percent for 1 year — but some employees will not see any changes in their tax rate.

Here are the new law’s effects:

■ Civil Service Retirement System (CSRS) employees — Since they do not pay Social Security, the new law does not change their tax rate and there will be no change in their retirement deductions.
■ CSRS-offset and Federal Employees’ Retirement System (FERS) employees — Social Security tax will be reduced by 2 percent and there will be no change in their retirement deductions.

The Social Security tax rate change will be reflected in Jan. 7, 2011 paychecks. The reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.

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