The fiscal cliff may have been averted but you are not in the clear. This new bill will change things for your pocketbook. Taxpayers will give away more of their paychecks to the government than last year.
"The first thing people will notice is their paychecks. There was no changes made to the payroll tax withholding," says Kelly Eickstead, Riverside Community Bank, vice president and market manager of wealth management.
Two years ago workers were given a kind of payroll tax holiday to help stimulate the economy. The rate dropped from 6.2 percent to 4.2 percent. Now it's back at the old level. So if you make $40,000 a year be prepared to see about $65 less a month in your check.
"The income tax rate will increase at 35 percent at the top rate to 39.6 percent at the top rate for 2013 taxes that people will file in 2014," says Eickstead.
That's for individuals making $400,000 or couples bringing in $450,000. Another change, the estate tax jumps from 35 percent to 40. One expert warns that's something farmers especially need to think about since their land is so valuable.
"They are probably in a unique situation where they need to take a hard look at what their estate is actually worth and do planning with some other types of vehicles and talk with a financial advisor to make sure they are on track to make sure everything is going to be handled the way they want it to be," says Eickstead.
Some things that will not change, unemployment insurance was set to expire, it is now extended for a year. That's welcome news for about 2 million people who are out of work. The child care tuition and research and development tax credit was extended so you can count on that deduction for 2013.
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