A fiscal cliff agreement was finally approved late on New Year’s Day. Wealthy Americans will be hit hardest by the deal, due to a 4.6% increase on income taxes for those with incomes over $400,000 (single) or $450,000 (married). A new investment income tax of 3.8% will be levied to help fund Obama’s health care initiative, affecting those with income over $200,000 (single) or $250,000 (married).
While these high income workers represent the minority, all workers will face higher payroll taxes in 2013. The deal did not renew the 2012 payroll tax holiday. As a result, worker’s will pay a 6.2% Social Security tax, an increase of 2% over 2012 tax rates.
How many of you are familiar with the fiscal cliff deal?