Congress has announced that it will extend a payroll tax cut for 160 million Americans that was set to expire at the end of this month.
For working families earning less than $50,000, the payroll tax cut reduced Social Security withholdings by $1,000 a year. This means the extension could continue to give workers $85/month, which for working families facing tight budgets could make a real difference in paying for groceries, rent etc. Had Congress decided not to extend this cut, these families would have felt an immediate impact on their budgets.
This deal also renews expiring jobless benefits and prevents a 27.4% pay cut for doctors of elderly Medicare patients.
Some business tax breaks did not make the list to be extended in the payroll tax cut deal. Some of these breaks that are set to expire include the research and development credit and a deduction that lets businesses accelerate depreciation on their equipment purchases. However, there is a chance that these breaks might get extended for 2012 and be made retroactive to January 1st, but that might not happen until the end of this year.