Transit subsidy, Social Security tax break becomes law

Friday - 12/17/2010, 12:01pm EST

The $858 billion bipartisan tax package was signed into law Friday by President Obama.

Social Security taxes will be cut by nearly a third, going from 6.2 percent to 4.2 percent, for 2011. A worker making $50,000 in wages would save $1,000; one making $100,000 would save $2,000.

The social security tax break, however, does not apply to all federal workers. Those under the Federal Employees Retirement System will not benefit from the tax break but not federal employees under the Civil Service Retirement System, who are not covered by social security.

The legislation "fails an important test of fairness," said Colleen Kelley, president of the National Treasury Emploees Union, in a statement.

Kelley said CSRS-covered federal employees will continue to contribute 7 percent of their pay into their retirement system and should receive the same benefit, "particularly since they work side-by-side with those under FERS."

The tax package also continues the $230 monthly transit benefit for employees who use public transportation to get to and from work. Without the passage of the package, the transit benefit would have reverted to $120 month in January.

RELATED LINKS

Text of the tax package

Pay freeze, funding questions remain as end of year approaches

Federal News Radio's Jolie Lee and the Associated Press contributed to this report.