Now that Congress has addressed the tax portion of the fiscal cliff, what happens to your pocketbook?
For most taxpayers, unless you got a raise on January 1, your paycheck will be smaller. Why? While Congress agreed to maintain income tax rates for individuals making less than $400,000 a year and families making less than $450,000 a year, they did not renew the so-called "payroll tax holiday." For two years, the amount of money withheld from your paycheck for Social Secuirty and Medicare was reduced to 4.2 percent as a way to stiumulate the economy. Congress allowed that temporary reduction to expire, and on the first of year, the withholding rate returned to 6.2 percent.
For an individual making $50,000 a year, that mena a cut of $1000 a year in take-home pay, or about $83 a month.
The Los Angeles Times has more on the change to the payroll tax.
CNN Money offers twelve tips to reduce your expenses and recoup that $83 per month and possibly more.
- Abe Schechter Scholarship Winner 2013
- Donate now to RTDNF
- George Foreman Tribute to Lyndon B. Johnson Scholarship Winner 2013
- Michele Clark Fellowship Winner 2013