President Barack Obama signed a two-month extension of the payroll tax cut , ending what had been a heated political stalemate and sealing a hard-fought win for Democrats on an issue -- taxes -- that has historically favored the GOP. House GOP relents on payroll tax cut deal .
Signing into law this two month extension of the payroll tax cut means that 160 million American workers will not see their paychecks shrink starting Jan 1, 2012.
Under the deal , the payroll tax will remain at the current 4.2% rate instead of reverting to the 6.2% rate it was at before the cut enacted last year. Without congressional action, the higher rate would have returned in 2012, meaning an average $1,000 tax increase for 160 million Americans. The typical worker's take home salary would have been reduced by about $40 per pay period without the tax cut.
After signing the tax cut into law, the first family heads to Hawaii.
