Despite Fiscal Cliff deal, Kentuckians face higher taxes

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No major tax increases and no major spending cuts, but the expiration of the Payroll Tax Holiday, part of the Tax Relief Act of 2010 will impact the majority of Kentuckians.

"That is going to effect people's wallet, it's going to effect their paycheck, and it starts immediately," says Dr. Jennifer Hunter, an Assistant Extension Professor with Family Financial Management at the University of Kentucky.

Jennifer Hunter says most people will now have to pay two percent into social security taxes, "If we look at the average person that let's say makes $50,000, that would come out to roughly about $80 a month or $1,000 a year. They would pay more in taxes than what they paid this last year."

Hunter advises to plan for the increase but believes the decision reached by Congress won't have as large of an impact on the middle class, "It is an increase, but in the grand scheme of things of what could have happened, it's fairly insignificant."

But, not everyone is satisfied with what's going on in Washington, "Congress is just up there messing round with the tax payers money,"
says Antoine Smithers, a Lexington resident.

Congress has delayed discussing the proposed $1.2 trillion in spending cuts for at least the next two months. Smithers believes it's just delaying a bigger problem.

"Now they are going to argue about getting more money to balance the budget. But the fiscal cliff, they should have took care of that a long time ago," says Smithers.

Hunter says those making more than $400,000 or $450,000 as a couple will pay higher taxes this year. Hunter says they are taxed 35-percent, but under new legislation will be taxed 39.6 percent.

Hunter says under the Farm Bill, the price of a gallon of milk is not expected to increase.

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