How the Fiscal Cliff Deal Affects You
GRAND RAPIDS, Mich.- Most West Michigan taxpayers will not see their taxes go up drastically. But, middle class workers can expect to see some things affected after the House of Representatives approved measures to avoid a Fiscal Cliff late Tuesday.
Louis Moran, of Deloitte Tax LLP in Grand Rapids, said most taxpayers will not see a significant change. He explained just how working middle class individuals and families will be affected.
“One change they will see is the payroll tax holiday of 2% for FICA taxes not extended,” said Moran. “Folks will see an extra 2% taken out of their checks.”
The payroll tax funds Social Security. The lower rate was costing the government $120 billion in tax revenue a year.
To be more specific, if you make $30,000 a year, you can expect to pay about $50 more a month in taxes.
If you earn $50,000 a year, the contributions jump close to $80 dollars more a month.
And, if you make around $113,700 a year, you will pay around $190 dollars more a month in taxes.
“It really puts [taxpayers] back to where they were two years ago,” said Moran.
Moran and his team just started to sort through 156 pages of the newly passed bill, Wednesday morning.
He added that many credits have been extended for middle class families, like most child care, education and mortgage debt relief.
“One of the struggles with all of this is that there was so much uncertainty as to what would happen with taxes,” said Moran. “Now, we have some certainty in 2013 and that’s a good thing.”
Knowing how this will all break down, the best thing people can do right now is to anticipate the change in their paychecks, and to plan accordingly.