Most workers will pay more in payroll taxes in 2013
Updated On: Jan 02 2013 04:53:02 PM EST
The "fiscal cliff" deal in Washington protected most workers from an income tax increase, but they will likely still have to pay more in payroll taxes.
After a two year "holiday" the payroll tax reduction expired Dec. 31 and Congress chose not to extend it, which means the Social Security withholding rate returns to 6.2 percent from 4.2 percent.
The 2-percent increase in taxes will cost the average family nearly $1,000 a year, a jump that many Americans aren't happy about.
"But I'd rather pay higher taxes if that means bringing down the deficit, but I don't think that's going to happen," said Carol Zehil.
The legislation did not prevent the Social Security payroll tax from expiring.
Here are the estimates of what a 2-percent cut in pay could mean to workers' income:
For those who make $20,000 to $30,000, it's $297 a year.
Those who make closer to $40,000, it's $445.
For those with a $40,000 to $50,000 income, it will cost $579.
And those who make more than $50,000 will be out nearly $1,000 or more.
"That's a lot more money that I have to put out that I could save," Christopher Lewis said.
"The bill part is going to get taken care of, regardless," Kevin Williams said. "When you start thinking about the extra activity stuff you would've done if you had that money, that makes you stop and pause and second judge yourself 'bout, 'Maybe I can't do this stuff this week.'"
It's the kind of cut Mark Patrick, a certified public accountant, believes taxpayers need to be thinking about.
"With all the uncertainty we've had, you need to be very careful about your budgeting," Patrick said. "You need to get out of debt if you can so you don't have that obligation, try to be as frugal as you can in what you spend and have a little bit of cash reserve so that when these come up, these transitions that you have to deal with, you're prepared for."
It's a slice in income workers can expect on their first paycheck of the year.
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