Payroll Tax Increase Set To Impact Workers - WMBB News 13 - The Panhandle's News Leader

Payroll Tax Increase Set To Impact Workers

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Bay County, Fla. -

As many Americans woke up today, the ramifications of the fiscal cliff negotiations could be felt in their wallets. The social security payroll tax is going up, and American workers will see the effects.

"Was pretty frustrated...said a few words that I can't say here but I was very frustrated," resident Michael Hepner said.

You may have had the same reaction Hepner did when he saw his most recent pay stub.

"Felt like the people who are responsible for this are not thinking about who all it's affecting," Hepner said.

The drama over the fiscal cliff came to an end earlier this week when congress passed a tax package that extended tax breaks for middle class families. The payroll tax cut didn't survive.

"Anybody who worked got a two percent increases in their taxes because they went back to the original social security rate," said Ronya Simmons with Padgett Business Services.

That rate is 6.2 percent. Payroll expert Ronya Simmons says it was cut to 4.2 as a part of president Obama's 2011 stimulus plan.

"When they did the stimulus package they gave the employee...but not the employer...a two percent cut in the social security," Simmons said. "On $1,000, 2% of a thousand dollars is 20 bucks."

The news is not welcome to local workers like Hepner

"We have three daughters," Hepner said. "It'll cause us to tighten up on things somewhere, as far as how we spend things and what we can go out and do or not do."

Resident Debbie Todd said the increase will be tough on her family.

"There's a lot of working mothers like me that fight every day to survive, and with the tax increase it's going to hurt a lot of people," Todd said.

Simmons says taxpayers have to look to their elected representatives in DC.

"If people want their taxes to go down, they have to figure out how to get Washington to spend less...that's the bottom line," Simmons said.

Experts with the Tax Policy Center say this is the first year since 2008 that there hasn't been a stimulus related tax relief for individuals.