Fiscal cliff deal to affect hundreds of Mississippi households - WDAM - TV 7 - News, Weather and Sports

Fiscal cliff deal to affect hundreds of Mississippi households

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HATTIESBURG, MS (WDAM) -

 

Americans may be breathing a deep sigh of relief after a bill to avert a fiscal cliff was approved Tuesday night – until they see their next pay stub.

By averting the fiscal cliff lawmakers raised income taxes on the wealthy, but in this deal everyone's taking a hit.

Social Security payroll taxes are going up for all American workers.

"When you get your paycheck you're going to notice that you have less money to bring home each week from that paycheck," said owner of Holland's Tax Service Cynthia Holland.

Payroll taxes rose to 6.2% under the deal from 4.2% last year.

"If you're an average household in Mississippi making $35,000 that means those families are going to bring home $700 a year less to spend in their household," said Holland. "If you're making $70,000 that's going to put it up to around $1,400 less for those average households, so that's the biggest affect that's going to hit our people here in Mississippi."

Along with the payroll tax cut also come the income tax rates.

"The biggest effect is going to be the people making over $400,000 a year, couples $450,000, those are the people that's going to be mostly affected by this," said Holland. "Their tax rate is at 35% now, it's going to put their tax rate up to 39.6, so they're going to be paying a lot more in taxes."

The bill passed by the House and Senate also extends most of the Bush-era tax cuts for individuals making less than $400,000 a year and married couples making less than $450,000 a year.

"Those were the ones that was most important to a lot of our people here in Mississippi," said Holland. "They're still going to get their child tax credit, they're still going to get their earned income credit."

Though the bill will protect 99% of Americans from and income tax increase, most of them will still end up paying more federal taxes in 2013.

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