Dollars & Sense: Your Taxes Will Almost Certainly Go Up in January, and Congress Won’t Stop It
Regardless of who wins the presidential election, starting January 2013 some 163 million workers across the United States will be slapped with a significant tax increase.
That is because the temporary reduction in the Social Security payroll tax will expire at the end of the year, and there does not seem to be a lawmaker around interested in extending it any further. With too much standing in the way to even try to stop it—Republicans question its efficacy, Democrats don’t want to deprive Social Security of funding—this tax increase is predicted to cost the average American worker nearly $1,000 per year, with two-income families at six figures paying in almost $5,000.
So, beginning in 2013, workers will once again contribute 6.2 percent of their income (of the first $113,700) to Social Security compared to the 4.2 percent they have been paying in since 2011. While the increase might not seem like much, the two-year tax break has saved some workers more than $1,000 per year.
The two-year tax cut cost Social Security almost $103 billion in 2011 and $112 billion in 2012, which by law Congress must repay, adding more strain to the national debt as well as the average American household.