Payroll Taxes Increased

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STATELINE (WIFR) -- Your taxes are going up but try to keep in mind it could be much worse.

The payroll tax increased 2% as of yesterday and that means that on average, many of us will lose at least $25 every two weeks per paycheck. The payroll taxes fund social security. For the past two years we've been paying 4.2% and now we'll be paying 6.2%. The more money you make, the more you'll be paying, but if the deal hadn't been reached financial experts say, on average, each household would be losing thousands more.

“They met somewhere in the middle, but at the end of the day, we’re all gonna pay. But not as bad as it could have been,” said Theresa Pesina, CEO of EZHire Search and Placement.

Another big part of the deal was tax credits and deductions. If you have a child in college, you still get to take up to a $2,500 tax credit for tuition and you also get to keep a $1,000 child tax credit. Both of those were on the chopping block.

It is unlikely local employers will be able to pay people more to make up for the increased taxes, however some of the small businesses we spoke with say they may increase salaries slightly as a fringe benefit. The reality is, though, the employer also has to pay that 2% increase so everybody is going to shell out a little extra for the sake of keeping social security funded.

The fiscal cliff deal extends the Bush Era tax cuts for families who make less than $450,000 a year. Congress now has until March to figure out how to cut spending. Long-term unemployment has been extended through the end of the year and our paychecks will be smaller now that the “payroll tax cut” has expired. The 113th Congress will be sworn in tomorrow.

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