Post-Cliff Income Taxes: Three-Quarters of Americans to Pay More

Post-Cliff Income Taxes: Three-Quarters of Americans to Pay MoreMore than 75 percent of wage earners will pay higher taxes in 2013 under the fiscal-cliff legislation, with the average increase at $1,257, according to the Tax Policy Center.
The end of the payroll tax holiday, which Americans enjoyed for two years, will have the biggest impact. Workers will have to pay the full 6.2 percent of Social Security taxes, up from the 4.2 percent that was in effect since 2010, when President Obama and Congress sought to boost the economy by giving everyone more take-home pay.
Those earning $30,000 in annual income will see $50 a month less in their paychecks. Those making $113,700, which is the maximum amount subject to the payroll tax, will get $189.50 less each month.
Americans who make less than $10,000 a year will pay $68 more in federal taxes on average. Those who earn between $50,000 and $75,000 will be hit with a $822 increase.
Much wealthier income-tax filers with incomes of $1 million or more will get a $170,341 hike in taxes on average.
The increase in tax rates will hit the richest Americans the hardest. Couples with adjusted gross incomes above $450,000, or individual filers above $400,000, will see the highest tax rate at 39.6 percent. Millionaires will pay $122,560 more a year just from the move to the highest rate, said the Tax Policy Center.  They will also pay a 20 percent tax on capital gains and dividends, up from pre-cliff rate of 15 percent.
Wealthier Americans will also pay more as a result of the president’s health care reform law. Joint filers earning more than $300,000, or single taxpayers with more than $250,000 in income, will see limits on personal exemptions and itemized deductions limited.
Even wealthy taxpayers with a family income above $250,000 for couples, or $200,000 for singles, will see a 0.9 percent increase because of health care reform.  And some will pay 3.8 percent on certain levels of investment income to help fund expanded health care for uninsured Americans.
Source: Tax Policy Center
Income Tax Increases for 2013 (Tax Policy Center)

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