(MOBILE, Ala.) - Despite the New Years Day fiscal cliff deal, most Americans will still pay more federal taxes in 2013. That's because the bill does nothing to prevent the social security payroll tax reductions from expiring.
"Most Americans are still going to see a 2% increase in social security tax," said Mobile CPA Bob Anderson.
In 2011 and 2012, workers paid 4.2% into social security. From here on out employees will pay 6.2%.
"So if you make $50,000 a year, that's a $1,000 additional tax on you," said Anderson. "But it's not going to be as bad for most people as we thought it was going to be. The Bush Era tax cuts have been extended for five more years and that's significant because that includes your tuition credits and that includes your child care tax credits."
But if you make more than $400,000 a year, you'll see your income tax rate jump more than 4% from 35% to 39.6%.
"Those are the employers that are providing the jobs for the people. It doesn't encourage them to make more money," said taxpayer Sue Cooper. She's most upset with the way the vote was made.
"I don't like the fact that they waited until the last minute to decide," she said.
So could the vote that came in the nick of time delay tax season?
Bob Anderson thinks it could.
"Based on the fact that there's a lot of new information all at once, I think you can expect a 2 to 3 week delay in filing your 2012 tax return and anytime there's a delay in filing it's going to cause a delay in refunds," said Anderson.
The fiscal cliff deal did freeze the exemption on the estate tax or death tax at $5 million and it is going to be indexed for inflation.
High income families will realize the biggest tax increases. Married couples making more than $450,000 a year will no longer be eligible for the Bush Era tax cuts. Also as part of the new health care law, couples making more than $250,000 will have to pay a new 3.8% tax on investment income.
The budget agreement left Alabama lawmakers at odds.
Republican Senator Richard Shelby voted against the bill.
"This resolves nothing. We will continue to lurch from crisis to crisis and we're drowning in debt. And two months from now or less we're going to have another crisis," said Shelby.
Senator Jeff Sessions said he reluctantly supported the measure with a "yes" vote.
"We were faced with the charge that Congress had to pass a law to keep tax rates from going up on everybody," said Sessions.
Congressman Jo Bonner strongly opposes the tax package and the way it was presented at the 11th hour.
"This was a flawed process from the start. The Senate had approximately nine minutes from the time they got the bill to the time they voted at 2am January 1st. Then by the time it came to the House we had less than 20 hours to digest it and realize there's not a penny of reduction in spending but a lot of new taxes and unfortunately in addition to new taxes there's more debt and borrowing to the tune of $4 trillion for the next decade," said Bonner.
