Get Ready For Less Money In Your Paycheck
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MIAMI (CBSMiami) – Congressional leaders are patting themselves on the back Wednesday after finally passing a bill dealing with the fiscal cliff. The bill prevented most tax hikes for middle-class taxpayers, but that doesn’t mean Uncle Sam won’t be taking more out of your paycheck.
Under the bipartisan bill, one tax that won’t be extended is the payroll tax cut. President Barack Obama had originally asked for the payroll tax cut to be extended, but Congressional Republicans opposed the measure which served as a stimulus.
The payroll tax cut was originally put in place two years ago during the height of the Great Recession. The tax, which helps fund Social Security, was set at 4.2 percent for the last two years.
As of Tuesday, the tax reverted back to its old rate of 6.2 percent on the first $113,700 in wages. For workers earning $50,000 a year, taxes will rise by around $1,000. For a worker earning $110,100, the increase will be around $2,200, according to the Wall Street Journal.
Businesses have allowed salaries to remain stagnant over the past few years and have not indicated they will begin to invest the trillions of dollars on the economic sidelines into higher wages as tax rates increase.