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.
In Washington, many are questioning the effectiveness of this hasty agreement. Click here for more information.
How many of you are familiar with how the fiscal cliff deal?