If you have been paying attention to the election news lately then you have no doubt heard about the “fiscal cliff”. This term does not refer to any single condition, but to a combination of things that are set to occur unless Congress acts to stop them.
One item of particular interest is the expiration of the Bush tax cuts which lowered marginal income tax rates. You can see the effect of allowing the tax cuts to expire in the chart below.
2012 10% 15% 25% 28% 33% 35%
2013 15% 15% 28% 31% 36% 39.6%
How would this pan out for the average household in Texarkana? According to the U.S. Census Bureau, average household income in Texarkana, Texas is about $55,000. Using this data, a rough estimate gives us an increase in income tax of about $800-$1100 for that mean income household depending on filing status.
The takeaway here is to be mindful of how these changes, if allowed to occur, will affect you. We encourage our clients and the general public to work closely with their CPA or other tax professional in order to be prepared.
The opinions voiced in this material are for are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.