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While less than 1 percent of households will face an income tax increase this year under the fiscal cliff plan approved by Congress, a whopping 77 percent will pay more in their Social Security payroll tax.
The payroll tax will increase by 2 percentage points from 4.2 to 6.2 percent on income up to $113,700, affecting 160 million Americans. That means a person making $50,000 a year will shell out an additional $1,000 this year.
The country’s wealthiest Americans will also be paying more. Congress returned the marginal tax rate to 39.6 percent for individuals on income over $400,000 and $450,000 for couples.
But the biggest hit to wealthy Americans comes from part of the bill that restores limits on deductions and exemptions to American families making more than $300,000.
They will still be able to claim the same deductions on income up to $300,000, but income over that amount will face limits in deductions.
But overall, very few households making less than $500,000 will face an income tax increase.