Has new tax rate in 2013 harmed you?

[Alan]

Quote:

Originally Posted by donheff Since I am not going to be in a high rate for the foreseeable future and am not subject to payroll tax all I see is a permanent tax cut.

Same for us.

[rodi]

Got hit with the sunsetting of the SS reduction. Planned for it - so no biggy.

Slight increase in sales tax here in Cali... haven't really noticed because... well... I hate shopping for anything other than groceries...which are tax free.

I'll continue to benefit from the child deductions since those were extended.

[ejman]

I am absolutely delighted - nah thrilled - that income tax rates remained at the incredibly low levels I've seen for the last decade. My Federal tax payments have been near non existent since I retired at the end of 2002 and for this gift to be made "permanent" is amazing to me. I've just started collecting SS (turned 62 a few months ago) So am also very pleased that the wage slaves are contributing to my pot in the appropriate manner

[Amethyst]

I pay 7% into a DB pension plan and don't pay into SS, so the FICA tax holiday did me no favors and I don't miss it

Others at work are moaning, though. Funny, I remember people dismissing the small gain they saw from the payroll tax holiday when it first came into effect. I guess that is human psychology: We tend to regret a loss more than we appreciate a gain of the same amount.

We make way below the "rich people" threshold, so our Federal tax rates will stay the same. We have been paying AMT for years and I guess we will continue to do so.

OTOH, our property tax went up $400 last year - despite no increase in valuation - as MD passed teachers' pension costs to the counties. I guess in the end, we are all robbing each other to pay for each other

Amethyst

[travelover]

Quote:

Originally Posted by ejman I am absolutely delighted - nah thrilled - that income tax rates remained at the incredibly low levels I've seen for the last decade........

It is amazing isn't it? And we haven't borrowed a dime to cover our expenses.

[ejman]

Quote:

Originally Posted by travelover It is amazing isn't it? And we haven't borrowed a dime to cover our expenses.

Noted. Was tempted but decided not to veer off into political lala land...

[GrayHare]

IF (big if) restoration of this tax means scheduled SS benefits will be fully funded for my lifetime, it will not hurt but rather help.

[foxfirev5]

The 2% payroll tax is noticeable but has no bearing on my already light spending. It's just a little less put into savings. I never saw the sense in the temporary reduction anyway. That's all I've got to say about that. Any more and I'd go political real quick.

[steelyman]

I don't really know, since this is the first year I will only have pension income (besides investments). I never paid the SS payroll tax, only money to the state. For some unfathomable reason, my state does not currently tax retirement income, so my guess is that I'll be better off (until they completely run out of money!)

[target2019]

My pay is down about 5% from end of last year. That's some combination of 2% more to SS, 401(k) bumped up a few points, and more withholding for certain state taxes until a max is reached.

I might get another whopping 2% raise this year, so that will offset the SS tax going back to normal.

Oh yeah, it will have some effect on my consulting income taxes, but I don't consider that harmful.

[FinanceDude]

Just a little fair warning, this is only the beginning.....2014 will hit us a lot harder........

[FANOFJESUS]

Quote:

Originally Posted by FinanceDude Just a little fair warning, this is only the beginning.....2014 will hit us a lot harder........

SS and Medicare are on the table. My guess is they each go up a year in age. I thought that was in 2013 what happens in 2014?

[MichaelB]

Quote:

Originally Posted by FinanceDude Just a little fair warning, this is only the beginning.....2014 will hit us a lot harder........

QQ47?

[scrabbler1]

Having ERed in late 2008 I did not benefit from the payroll tax reduction so I am not hurt by the end of the payroll tax holiday. I pay zilch, of course.

I have benefitted more and more from the 0% federal income tax on QD and LTCG. When I combine that with the tax-free interest on the muni bond funds in my taxable accounts, I end up with only 62% of my income subject to federal income taxes.

My ladyfriend has not been happy about seeing her first 2013 paycheck drop compared to 2012's. But I reminded her that she has seen a reduction in two key expenses in 2012 so it was good timing that she had that payroll tax cut when her expenses had not yet dropped. Some of her other expenses have risen so is not in as good a shape as she was only a month ago. However, she is better shape than she was 2-3 years ago.

New York State slightly cut some of the state income tax rates starting in 2012 so I get a small tax cut there, too. What is kinda amazing is that despite my marginal tax rate for NY being about 6.5% and my marginal tax rate (for ordinary income) being 15%, I pay nearly the same amount in state income taxes as I do federal income taxes.

[obgyn65]

I don't know since my 401k percentage deduction has changed, and I haven't checked the precise amounts.

[karluk]

Even though I am retiring next month, I will be getting about $65,000 in earned income for the year because I am eligible to convert a significant amount of accrued leave into a cash payment upon retirement. So the higher payroll taxes this year will cost me $1,300 compared to retiring before the end of 2012. Retiring last year would have left me a net loser, however. All of the cash payment would have been taxed in the 25% bracket last year, whereas this year I should be able to stay in the 15% bracket.

As others have remarked, making permanent the 0% tax on capital gains and qualified dividends for people in the 15% bracket leaves me a big net winner from the new tax law. This 0% rate is worth far more than the immediate $1,300 hit I am taking due to higher payroll taxes.