'Fiscal Cliff' averted, but taxes still going up: How it will affect you

WASHINGTON - Finally, a deal.  Late Tuesday night, the House of Representatives passed the Senate's version of a bill that will keep the nation from completely going over the Fiscal Cliff. 

The bill will avoid, for now at least, the major tax increases and government spending cuts that had been scheduled to take effect on January 1. 

Something wage-earning Americans will notice though, social security payroll taxes will be headed up as the tax cuts for that FICA line expired on New Year's Day and will be headed back to 6.2 percent. 

That's two percent more than what we have been paying for the last two years. 

That breaks down to about $1000 more a year taken from your paychecks bottom line.

This expiration is expected to effect some 160 million Americans.

The bill, which passed the House 257 votes to 167 raises tax rates on incomes of more than $400,000 for individuals and $450,000 for couples. 

For Americans with a household income of around $113,000 annually, you're looking at an additional $2,274 a year taken out at the end of your pay cycle.  That's nearly $200 extra per month.

Also in the new deal, long term unemployment benefits, which usually pay insurance benefits for up to six months, have been extended.

A victory for roughly two million Americans who were at risk of losing them. 

And for you parents out there, the Child Tax Credit of $1,000 for each qualifying child, under the age of 17 in 2012, stays in place; however, there is a stipulation. 

Married couples making $110,000 per year or single filers who earn more than $75,000 annually are being phased out and won't be able to utilize this tax credit in 2013.

In an appearance late Tuesday in the White House, President Obama called the House vote a victory for the middle class.

"Thanks to the votes of Democrats and Republicans in Congress…I will sign a law that raises taxes on the wealthiest two-percent of Americans while preventing a middle-class tax hike that could have sent the economy back into a recession and obviously had a severe impace on families all across America," President Obama said.

Had a deal not been reached, the average American family would have seen an estimated $3500 in annual tax increases.

The bill didn't pass without its share of opposition though, as many Republicans spoke out against it.  The bill had many of the higher ranking Republicans in the house divided.  Speaker John Boehner was in favor of the bill, but lawmakers like MMajority Leader Eric Cantor voted 'nay'. 

This fiscal cliff deal was completed not a moment too soon as a new Congress will be sworn in Thursday, January 3.  Had a deal not been passed, bi-partisan negotiations would have had to start at square one.

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