Taxes will increase for most Americans despite fiscal deal

While the tax package that Congress passed New Year’s Day will protect 99% of Americans from an income tax increase, most of them will still end up paying more federal taxes in 2013, analysts say. That’s because the legislation did nothing to prevent a temporary reduction in the Social Security payroll tax from expiring. In 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year. The Tax Policy Center, a nonpartisan Washington research group, estimates that 77% of American households will face higher federal taxes in 2013 under the agreement negotiated between President Barack Obama and Senate Republicans. High-income families will feel the biggest tax increases, but many middle- and low-income families will pay higher taxes, too. Households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013, according to the Tax Policy Center’s analysis; households making between $50,000 and $75,000 will face an average tax increase of $822. “For most people, it’s just the payroll tax,” says Roberton Williams, a senior fellow at the Tax Policy Center. However, the tax increases could be a lot higher for some. Read the full story here for more details.