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77 Percent Will Pay More in Taxes in 2013 Under Fiscal Cliff Deal

The main reason is the elimination of the payroll tax.

 

Despite the House and Senate reaching a Fiscal Cliff deal, 77 percent of Americans will pay more in taxes in 2013.

That's because even though just 1 percent of households will pay higher income taxes, an increase in federal payroll taxes will hit nearly every wage earner, according to analysis by the Tax Policy Center.

Individuals earning between $40,000 and $50,000 a year face an average tax increase of $579 in 2013, according to the Tax Policy Center's analysis.

The average U.S. worker would pay $679 more in taxes this year under the fiscal cliff deal passed by the Senate early Tuesday morning, while the average member of the top 1 percent of earners would pay $73,633 more, according to Tax Policy Center analysis.

The increases are relatively modest compared to what the fiscal cliff would have imposed, reports NBC News.

The payroll tax cut is gone, meaning smaller paychecks in 2013.

That tax break, in effect in 2011 and 2012, reduced the Social Security tax rate workers pay to 4.2 percent. The resumption of the regular 6.2 percent rate means about $1,000 less in pay this year for people making $50,000, reported marketwatch.com.

The richest households face the biggest tax hikes, reported USA Today.

The income tax rate rises to 39.6 percent from 35 percent for individuals earning above $400,000 for individuals and $450,000 for married couples. For 2013, households making between $500,000 and $1 million will pay $14,812 more in taxes, says the Tax Policy Center analysis. Households making more than $1 million would get an average tax increase of $170,341.

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