A deal has been reached by the Senate and the House that ultimately avoids the fiscal cliff, but that doesn't mean millions of Americans will avoid increased taxes. YNN's Antoinette DelBel joins us from the newsroom with more information on what the vote means.
WASHINGTON, D.C. - After the Dec. 31 deadline, an agreement has finally been reached between the House and Senate.
The deal keeps tax rates steady for most Americans, while tax rates for higher earners will increase from 35 percent to 39 percent.
However, millions of Americans will still be affected as a result of the payroll tax increase, or your Social Security contributions and Medicare, which is set to expire and is not a part of the budget talks.
"The median income in the U.S., let's say is $45,000 to $50,000, they're going to pay an extra $1,000 minimum over the course of the year,” said Ted Schmidt, an economics & finance professor at Buffalo State College. “So, every household in the U.S. that's earning income is going to see that increase in taxes, that's going to lower spending."
"If you have a 401K Plan at work, if there is a lot of volatility, there's a little bit of a pull back in the market, try to increase your contributions if you can," said Michael Lomas, a financial planner with Financial Guys.
The payroll tax will affect Americans earning up to $105,000 in income.