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Don't be fooled by January pay -- higher taxes loom

2 years ago December 24, 2012 Dec 24, 2012 Monday, December 24 2012 Monday, December 24, 2012 12:07:07 PM CST in News
Source: ap

WASHINGTON- Even if the "fiscal cliff" can't be avoided, workers probably won't feel the full brunt of the tax hikes in their paychecks right away.

The IRS has delayed releasing income tax withholding tables for 2013. So employers are planning to withhold income taxes at the 2012 rates, at least for the first one or two paychecks of the year.

That doesn't mean take-home pay won't take a hit. Social Security payroll taxes are set to increase on the first of January. And that will be reflected in paychecks.

And the other tax increases will be felt eventually. If employers don't withhold enough taxes in January, they will have to withhold even more taxes later in the year to make up the difference.

If Congress fails to act, workers at every income level face significant tax increases next year. According to the Tax Policy Center, a taxpayer making between $50,000 and $75,000 would get an average tax increase of $2,400.

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