|Posted on January 11, 2013 at 2:20 PM|
5 Ways Fiscal Cliff Deal Affects Your Taxes
Courtesy: CREDIT.COM | by Benjamin Feldman
At the last possible moment, Congress finally approved a deal to avoid the so-called fiscal cliff that was threatening to enact automatic cuts to government programs and tax increases on Americans.
While the fiscal cliff was a self-imposed crisis resulting from a previous bipartisan deal by members of Congress, it’s nice to know that our elected officials were able to come to an agreement on how to resolve the crisis (at least for the moment).
But for us regular citizens, there are lots of changes to how our taxes will be calculated. And many people are trying to figure out the implications of the deal for their own finances. So let’s look at how this deal will affect you:
1. Income Taxes
The most high-profile part of the fiscal cliff negotiations centered on income tax rates. President Obama wanted to extend tax cuts on individuals with an annual income below $250,000 while increasing tax rates on those with an income above $250,000. Republicans, meanwhile, wanted to extend the Bush-era tax cuts for all income levels.
The agreement they reached will raise the top tax rate from 35% to 39.6%. That rate applies to individuals making more than $400,000 and couples making more than $450,000 a year.
So if you earn more than $400,000 individually or $450,000 combined, you will see your income taxes go up. If not, then your income taxes will stay the same. However, your payroll taxes might increase. Read the entire article