2012 Social Security Tax Rate Update The Temporary Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2% to 4.2% of wages paid through February 29, 2012. The employer's portion remains at 6.2%. The Act also includes a new "recapture" provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period. This provision imposes an additional income tax on these higher-income employees in an amount equal to 2% of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100). The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. If you prepare payroll using QuickBooks, you will need to download the latest payroll updates to incorporate these changes. If you calculate payroll manually, you will need to obtain the latest tax tables.