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When you looked at your checking account today, did you notice something different? If today is your pay day, I'm sure things didn't seem to be right. Your paycheck was a little smaller than usual, but for what reason? Your responsibilities at work weren't reduced. The boss didn't tell you that your salary was being reduced. You worked the same amount of hours as you did in previous weeks; so why is your paycheck smaller? The answer is simple, our federal and state government officials fought for it. 

Maryland, California and Washington D.C. raised personal income tax rates in 2013, though most of these increases affect individuals and families that earn more than $250,000 per year. 

Congress may have passed the fiscal cliff bill to prevent many tax increases, but taxes did go up for most citizens. The payroll tax holiday that reduced the employee social security contributions to 4.2% was allowed to expire, which results in a 2% increased contribution (6.2%).

You may also notice that your medical benefits cost more than they did last year. In response to the approval of Obamacare, many employer health care plans cost more. Most employers made some announcement about these changes in the 3rd or 4th quarter of 2012, but the changes don't become reality for most until they see their paycheck. In addition to these increases, flexible spending accounts related to medical care will also see tax increases.

Families earning between $450,000 and $1 million had their income taxes increased by an average $15,000 per year, according to the Tax Policy Center. This is a result of the passing of the fiscal cliff bill, which increased income tax rates by 4.6% for families earning over $450,000 per year and individuals earning over $400,000 per year.

All this means smaller paychecks in 2013, but what effect will it have on our economy? While these changes may not have moved you before you saw your paycheck, have things changed now? Share your thoughts and let us know what you think about your first paycheck after the fiscal cliff deal.

(Note: If you get paid on the 15th, come back and leave a comment after you see your first paycheck of 2013)




 


Comments

10/02/2013 8:03am

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