How tax increases will affect households
Wednesday - 1/2/2013, 1:30pm ET
WASHINGTON - The tax package passed by Congress will prevent one set of tax increases from hitting the vast majority of Americans, but it won't stop them all. A temporary Social Security payroll tax reduction is expiring, hitting nearly every wage earner, and income taxes on the wealthy are going up, too.
The Tax Policy Center, a nonpartisan Washington research group, estimates that 77 percent 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 also pay higher taxes.
A huge package of tax cuts first enacted under President George W. Bush was scheduled to expire Tuesday as part of the "fiscal cliff." The Bush-era tax cuts lowered taxes for families at every income level, reduced investment taxes and the estate tax, and enhanced a number of tax credits, including a $1,000-per-child credit.
The package passed Tuesday by the Senate and House extends most of the Bush-era tax cuts for individuals making less than $400,000 and married couples making less than $450,000.
How the tax increases will affect households at different income levels:
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Annual income: $20,000 to $30,000
Average tax increase: $297
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Annual income: $30,000 to $40,000
Average tax increase: $445
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Annual income: $40,000 to $50,000
Average tax increase: $579
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Annual income: $50,000 to $75,000
Average tax increase: $822
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Annual income: $75,000 to $100,000
Average tax increase: $1,206
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Annual income: $100,000 to $200,000
Average tax increase: $1,784
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Annual income: $200,000 to $500,000
Average tax increase: $2,711
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Annual income: $500,000 to $1 million
Average tax increase: $14,812
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Annual income: More than $1 million
Average tax increase: $170,341
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