The fiscal cliff may be averted, but that doesn't mean you won't see some changes in your paycheck.
The House and Senate finally ended the financial debate over the New Year, extending many of the so-called "Bush-Era" tax cuts. The deal did not include a payroll tax credit renewal. The two-year, two percent payroll break will go away, taking money from everyone’s pocket.
“What they did for 2010 was reduced everybody's Social Security from 6.2 percent to 4.2 percent and ended up extending that for one year,” Sioux Falls Eide Bailly partner Thomas Pruner said.
The credit was initiated during the economic crash of 2009. Pruner said apart from that, only the so-called “one percenters” will see tax increases. Those are individuals making more than $400,000 a year or families bringing in more than $450,000.
The Fiscal Cliff conversation was a long, drawn out battle on Capitol Hill. Pruner said the resolution finally clears up confusion and ambiguity tax and finance professionals have dealt with as they closed out their 2012 books.
“The rules are more permanent,” Pruner said, “We didn't know the certainty of what the rates were going to be. Now we know, so there's some certainty. It's going to help us.”
So how much will you pay? A person making $35,000 per year will pay $700 more, which amounts to approximately $60 each month.