What the Fiscal Cliff Deal Means for You

fiscal agreementLate Tuesday evening the House of Representatives came together to vote on the fiscal cliff deal; the deal passed with a 257-167 vote. Less than 24 hours before the House voted on the measure the Senate had approved the deal 89-8.

Making a statement shortly after the deal was approved President Obama told the press, “Thanks to the votes of Republicans and Democrats in Congress I will sign a law that raises taxes on the wealthiest 2 percent of Americans while preventing tax hikes that could have sent the economy back into recession.”

The approved deal will raise taxes on individuals with an income of $400,000 or higher and those with a household income of over $450,000.

Increased tax rates on capital gains and dividends were also included in the deal. Taxes on estates over $5 million will also be raised to 40 percent. Unemployment benefits and some stimulus tax credits will be extended with this deal.

Also included in the bill is a nine month farm bill extension which means milk prices won’t increase just yet. Individuals making over $250,000 and households making over $300,000 will see a phase out of personal exemptions; itemized deductions will be limited.

The American Opportunity Tax Credit, Child Tax Credit, and Earned Income Tax Credit will be extended for five years.

The start of automatic spending cuts will be delayed by two months and in the next few months debt ceiling talks will be another issue to be tackled by Congress. The payroll tax cut which expired on December 31st was not renewed; if you make over $50,000 you could be paying over $1,000 more in taxes this year.

Congress also agreed on freezing their pay, members will not receive a pay increase in 2013.

To learn more about what is included in the 157 page deal, visit the National Journal. You can also read the President’s full statement here.