2012 was a tumultuous year for families and for business owners. It featured continuing economic instability, high unemployment, and plenty of political uncertainty.
And if the “Fiscal Cliff” theatrics are any indication, 2013 is set to be another dramatic year. Whatever your political leanings may be, the reality is that uncertainty makes it difficult to plan for the future. Whether you’re seeking to grow your business or to solidify your family’s financial future, the fewer the variables you face, the more accurate your plans can be.
Unfortunately, the current gridlock in Washington DC has created huge amounts of instability. In fact, just about the only thing we can be sure of is that most Americans will see their tax rate increase in 2013. FoxNews reports:
Taxes for most Americans will still go up this year despite declarations from President Obama and others touting Tuesday night’s fiscal crisis deal as a victory for middle-class workers.
At the same time, tax relief that was included in the package comes at a cost — contributing, along with new spending, nearly $4 trillion to the deficit over the next 10 years, adding to the nation’s more than $16 trillion debt.
But there will be federal tax hikes in 2013. That’s because the legislation pushed through the Senate and House on Jan. 1 does nothing to prevent a temporary cut in the Social Security payroll tax from expiring. That means, under the agreement brokered by the White House and Senate Republicans, 77 percent of American households will be forced to fork over higher federal taxes in 2013.
Households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013, according to the Tax Policy Center’s analysis. Households making between $50,000 and $75,000 will face an average tax increase of $822.
For most families, the increase will end there. But for top earners, taxes will get considerably higher this year.
The package passed by both chambers extends most the Bush-era tax rates for individuals making less than $400,000 and married couples making less than $450,000 — but lets them lapse for income above those thresholds.
The new tax package would increase the top income tax rate from 35 percent to 39.6 percent. Investment taxes would also increase for people who fall in the new top tax bracket, from a rate of 15 percent to 20 percent.
High-income families will also pay higher taxes this year as part of Obama’s 2010 health care law. As part of that law, a new 3.8 percent tax is being imposed on investment income for individuals making more than $200,000 a year and couples making more than $250,000.
Whether you’re planning for your retirement, for the future of your business, or for your children’s college fund, your job is made more difficult by the chaotic political and economic environment we are currently operating in. But in times like these, sound planning is more important than ever. If you’d like to learn more about planning for the future of your business or for your family, please don’t hesitate to get in touch with us today!