EUGENE, Ore. -- After months of debating and haggling congress passed a bill on Tuesday that pulls the country back from the fiscal cliff.
While congress averted the “fiscal cliff” of income tax hikes, workers will still see an increase in a different kind of tax.
Eugene-area tax preparers said that this deal is good news for average taxpayers. Marc Innocenti, president of the ABTS Inc. tax firm, said that workers will notice that their take home pay is not quite the same.
“I’m delighted that they finally took action. With things like the American Opportunity Credit, a whole bunch of tax credits were extended,” Innocenti said. “I think this is just going to affect basically 2% of those higher earning Americans.”
The bill will extend Bush-era tax rates for Americans making less than $400,000 (or couples making less than $450,0000.
Innocenti said that the bill has another tax credit included that helps homeowners in foreclosure. While the tax credit is complex, he said that it allows some people to write off some of their mortgage interest accrued through this year.
However, the bill also phases out a social security payroll tax discount by increasing tax rates 2 percent.
Households making between $40,000-50,000 will pay an extra $579 in 2013.
People earning between $50,000 to $75,000, the average tax hike is $822.
Selene Petersen, a Certified Public Accountant in Eugene said that most people will pay higher taxes in 2013.
“They might not have felt it as much when they got it, but they'll definitely notice it when it kicks back in,” said Peterson.
The increased social security payroll rates were met with mixed reviews from Eugene residents.
“I understand that. I think it's necessary,” said Susan Lax. “We're in bad shape in this country and we have to start turning things around."
“That it’s going up …. I’m not happy about that,” said Tim Simdars. “They just got to get their act together, one of these days.”
“It’s OK because if you look at the end result, it's a savings that you are putting in now and hopefully will gain later,” said Yayoe Kuramitsu.
The bill is also scheduled to make $110 billion in automatic spending cuts … money that most of congress wants to save that for another day.