Fiscal Cliff - How Does The Deal Affect You? - News and Weather For The Quad Cities -

Fiscal Cliff - How Does The Deal Affect You?

Updated:

The House is voting on a Senate approved fiscal cliff deal. However, what exactly is in the deal? The legislation will prevent tax increases for most Americans. The main points are income tax rates, estate taxes, tax credits, unemployment benefits, and automatic spending cuts.

Income tax rates are at the center of the fiscal cliff deal. Current tax rates for those making less than $400,000 and couples earning less than $450,000 will stay the same. Anyone who makes more than that will see a permanent tax increase.

Another change, payroll taxes will rise to 6.2% from 4.2% on workers first $113,700 of income. Estate taxes will also see a permanent increase from 35% to 40% on the value of estates over $5-million.

Tax credits from the 2009 stimulus will be extended. They include: a child tax credit, an expanded earned income credit and refundable credit for college tuition. Some business tax credits will be extending for a year. Unemployment insurance will also be expanded for one year.

The fiscal cliff deal also prevents $110-billion in automatic spending cuts. Instead, the cuts to military and federal agencies will be delayed for 2 months.