While the recent fiscal cliff deal helped many Americans avoid a large set of tax increases, it didn't prevent taxes from going up altogether. In fact, the majority of American households will see their taxes increase this year, according to an Associated Press report.
The culprits: an expiring Social Security payroll tax reduction and increase on income tax for the wealthy.
Households making an annual income of $20,000-$30,000/year will see an increase of about $300 on average. Other increases include:
- Income brackets of $30,000-$40,000 can expect an average $445 increase.
- Income brackets of $40,000-$50,000, can expect an average increase of $579.
- Households making $50,000-$75,000 will pay $822 more on average.
- And $75,000-$100,000 will cost an extra $1,206.
From there, the breakdown is a little more spread out:
- $100,000 to $200,000 = average of $1,784 in additional taxes
- $200,000 to $500,000 = average of $2,711 in additional taxes
- $500,000 to $1 million = average of $14,812 in additional taxes
- More than $1 million = average of $170,341 in additional taxes
Some taxpayers may not feel the difference as deeply as others. However, many households will likely find the tax increases highly burdensome after a devastating recession. A family already behind on their mortgage or struggling with credit card debt may not be able to handle the increase and will likely look to other options like loan modifications, federal and state benefits, and bankruptcy to help stabilize their finances.
Castle Law Office has been helping residents of the Kansas City metro get a fresh financial start for the past 14 years. Call us today at 816-842-6200 to speak with an attorney. Or you can email us and schedule your free consultation.