The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 that President Obama signed on Dec. 17 extended the various "Bush tax cuts" for another two years through 2012 and extended various expired provisions in the tax code through 2011. As a result, federal personal income tax rates are unchanged for 2011 aside from the yearly cost of living adjustments to the tax brackets reflecting inflation. Under this legislation there were two important tax changes for 2011.

1.The Social Security tax withholding rate changes
Under this new act, the social security tax withholding has decreased from 6.2 percent to 4.2 percent for all employees for 2011. This 2 percent tax reduction is applied to employee wages up to the Social Security wage base of $106,800. Any individual earning $106,800 or more in wages in 2011 will receive a benefit of $2,136.

Furthermore, self-employed individuals will also receive the 2 percent tax reduction as the Social Security portion of self-employment tax will be 10.4 percent as opposed to 12.4 percent. Medicare tax of 1.45 percent will continue to be withheld on all wage income with no ceiling (2.9 percent self-employment tax). However, employers continue to pay 6.2 percent Social Security tax on employee wages. This provision replaces the Making Work Pay Credit in effect for 2009 and 2010 that provided a credit of up to $400 for single taxpayers and up to $800 for married joint filers.

2.Bonus Depreciation increased on Acquisition of New Assets Placed in Business
In the second major change, businesses, including sole proprietors that acquire office equipment, furniture and fixtures, machinery etc. after Sept. 8, 2010, through Dec. 31, 2011, can claim a 100 percent bonus depreciation deduction on all qualifying assets. But, the taxpayer must be the original user of the asset, so that means used property does not qualify. There is no income limit for claiming this deduction.

3.Change in the Auto Mileage Rate
Under this new act, the standard mileage rate increases from 50 cents per mile to 51cents per mile.

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Ask TaxGuru Please refer to the legal disclaimer.

It will be implemented on new insurance policies or it will also effect the old one too ??
And what are its privileges to the policy holders ?

on insurance policies i think it will be implemented? or it's not? is that concern about other parts of tax relief or other things?