Assuming that President Obama continues his policy of not negotiating in good faith with U.S. congressional leaders on federal budget matters, what might your paycheck look like in 2013 after President Bush's 2003 income tax rate cuts expire?
That matters to you because if you earn either wages or a salary from a job, your income taxes will increase. And with that increase, so will the amount of taxes that you have withheld from each of your paychecks also go up.
We wondered what the potential impact of that might be on a working American's paycheck, so we adapted our paycheck withholding tool for 2012 by incorporating the withholding tax rates that would apply under 2003's original rules, updating the income thresholds to account for inflation.
That tool is below - just enter the indicated data for all the typical items that might affect the amount of federal income taxes that will be withheld from your paycheck and we'll work out how much federal income taxes will be withheld from your paycheck beginning in January 2013, as well as the percentage change from the amount that would be withheld from a paycheck you would receive in 2012.
In doing this exercise, we've taken the IRS' withholding tax income thresholds for both 2001 and 2012 and updated them to account for inflation, which we estimated based on the increase in Social Security's maximum taxable earnings from those years to 2013. We've also taken into account the reduced maximum amount of any health care flexible spending account contributions you might make in 2013, which will occur independently of other changes the nation's tax law thanks to ObamaCare.
As a result, the amount of federal income tax withholding from your paycheck that is estimated in this tool should be very close to the right ballpark for what you might actually see in your paychecks beginning in January 2013.
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
ironman at politicalcalculations
Thanks in advance!
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