But then, those are the income tax increases that most people are unlikely to notice on their paycheck. By contrast, they won't be able to help but notice that the size of the take-home portion of their paychecks is shrinking by 2% of their income thanks to the expiration of President Obama's temporary "stimulus" Social Security payroll tax cut, which isn't affected by the "fiscal cliff" standoff over federal income taxes. Here, the Social Security tax rate on personal income will return to 6.2% from its 2012 level of 4.2%, no matter what happens with the fiscal cliff situation. [There is no change in the portion of Social Security taxes paid by U.S. employers, who have continued to separately pay 6.2% of their employees' income to Social Security - Social Security has been running deeply in the red in part due to President Obama's "stimulus" tax cut.]
Our tool right here reveals what your paycheck, minus any state income tax withholding, will look like for now in 2013.
We'll update our tool once Washington D.C. gets its act together.
Speaking of which, if you want to find out how much federal income taxes would be being withheld from your paycheck in 2013 if not for President Obama's bracket creep, or to find out how much higher they might be if no deal is ever reached and the IRS has to go back to the income tax rates of 2001, our tool "Your Paycheck Over the Cliff" will answer those questions for you.
We've been in the business of calculating people's paychecks (not including state income tax withholding) since 2005!
But before we forget, your employer pays a lot more to keep you on the payroll than just your paycheck! The tool below shows how much it costs to employ you in 2011-12!
And you should also be aware that the employer's portion of Social Security and Medicare taxes (aka "FICA" taxes) have replaced corporate income taxes almost dollar-for-dollar over the years. Don't let anybody pull the "U.S. corporations aren't paying a fair share of taxes" line with you - they're really paying almost exactly the same share of all U.S. taxes that they have been for the last several decades!
Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.
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