What tax deal could mean for you
December 7th, 2010
12:07 PM ET

What tax deal could mean for you

The White House is working to get Democrats to support a last-minute deal on taxes that President Barack Obama hammered out with Republican leaders.

The compromise would extend the Bush-era tax cuts for two more years, keeping income tax rates at their current levels for everyone, as Republicans insisted. Obama and other Democrats wanted tax rates to rise only for individuals earning more than $200,000 a year and for families making $250,000 or more a year.

If the deal goes through, here's what it will mean for you:

Payroll taxes – Wage earners will have extra money in their paychecks with the lowering of the payroll tax from 6.2% to 4.2%. Someone earning $50,000 a year would pay $1,000 less in Social Security contributions next year. Someone earning $100,000 would pay $2,000 less. The payroll tax rate would go back up to 6.2% in 2012.

Income taxes - Not much to see here - at least in terms of your wallet. The compromise would extend the Bush-era tax cuts for two more years, which basically means the income tax rates will remain exactly the same for the next two years at their current levels for everyone.

White House fact sheet on agreement

Individual tax breaks - Low- and middle-income tax filers will see an increased value in credits for two years if they file for an earned income tax credit, the child credit or a revamped tax credit for college costs.

Unemployment benefits - The package would leave in place for 13 months the option to file for extended federal unemployment benefits. In some states, especially where job loss is extremely high, it can be up to 99 weeks.

Estate taxes - The estate tax exemption, which lapsed this year, would be would be set at $5 million and the top rate would be set at 35%.

CNNMoney.com: Tax cut deal and surprise stimulus - the cost

If a deal can't be reached:

Taxes will go up for everyone, since the current rates set under President George W. Bush expire automatically at the end of 2010. Democrats control both houses of Congress, but the Republicans will take control of the House of Representatives in January, and the Democratic majority in the Senate will be smaller than it is now.

The estate tax would return in 2011 with a $1 million exemption level and a top rate of 55%.

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Filed under: Finance • Taxes
soundoff (596 Responses)
  1. Fricsaid

    Until we put some money in the pockets of the majority, that being middle-class america, two things are going to happen. This economy will continue to suffer and the top 1% will continue to drain our pockets. It's a damn shame that you watch a multi-billion dollar company lay off thousands of hard working people and in the same breath, give out multi-million dollar bonuses and salaries. And don't tell me that politics don't have anything to do with it. They have everything to do with it.

    December 7, 2010 at 3:05 pm | Report abuse |
  2. beethovenopus27

    Obama is milk-toast.

    December 7, 2010 at 3:05 pm | Report abuse |
  3. Chuck

    It really pains me to see that our country has fallen so far in such a short time. Most of the posts i have read on here do nothing to come up with a solution to the problem othe than name calling or belly aching about a party. I don,t really care if you are replublican or democrat if you are able to work you need to work not just for the country, but most importantly for yourself. If you are on unemployment benefits for over a year you need to be diligently trying to find work. Look it is not economically smart to keep paying for it. People who have jobs and are able, start back giving to charities and churches. People who are looking for work, keep looking don't give up. My family gave and I'm sure some of yours did to alot of blood sweat and tears to build this country than to just let it fall. Stop blaming each other and do something. We need to get back to the basics and just use some common sense.

    December 7, 2010 at 3:08 pm | Report abuse |
    • Fricsaid

      Nice comment. You're right, all the finger pointing in the world isn't going to fix sqat. As much as I hate to say it, some aren't going to be happy unless they are b1tching. If there's no caos, they will create it.

      December 7, 2010 at 3:12 pm | Report abuse |
    • Fricsaid

      Sorry....meant "chaos." All in an effort to keep you spell checkers happy. 🙂

      December 7, 2010 at 3:14 pm | Report abuse |
  4. Mike Alan

    I was afraid when I voted for Obama he wouldn't have enough balls. Both Dem & Rep just don't get it. We'll all be better off voting for that Wacko up near that Russia. This way we'll know for a fact we're in trouble. Our leaders just haven't gotten it in so many years, but neither have the voters.

    December 7, 2010 at 3:09 pm | Report abuse |
  5. AZLib

    Any tax savings given to middle america will directly to WalMart to be shipped overseas. Tax savings to the wealthy will go directly to the stock market and Wall Street will further pressure more firms to offshore jobs. In the mean time I along with my children and Grand Children need to borrow $700,000,000,000.00 from Red Communist China to pay for the tax cuts of Bill Gates, Warren Buffet and a host of nice boys and girls in NYC banks. This is crazy. I first blame the GOP for their underhanded potlicking to the wealthy and could careless attidtude for middle and poor america. Second I blame the President for not fighting with them. I would rather have a tax hike then to give into those potllickers. If Obama will not stand up to corporate and wealthy greed determined to ruin middle america then who will? Yes we need to spend more money on our social infrastrure ... just like other industrialized countries inthe world and yes we need to stop the race to the bottom with china on our jobs. We need serious cost cutting in the military budget. No longer can we be the police force of the world. Sorry those days went out the window with W and his band of greedy men. We can no longer afford to spend more then twice what the rest of the world combined spends on military. No longer can we afford maned space flights. No longer can we allow countries like Israel, Egypt, Jordon and so many others to receive welfare checks from us when our own economy is on the brink of bankruptcy. I sincerely hope but doubt the dems in congress will have more guts then our president. Never forget the GOP who drove us to this terrible position.

    December 7, 2010 at 3:13 pm | Report abuse |
    • BPR1974

      Blaming the GOP for everything is ridiculous. Both parties are to blame because they work for Wall Street and mega corporations. It was under Bill Clinton that Glass Steagall was dismantled which helped pave the way for the financial nightmare we're experiencing right now. Stop buying into to partisan talking points and examine the events that lead up to this mess.

      December 7, 2010 at 3:26 pm | Report abuse |
    • dale

      BPR1974, you are correct, but be careful most these ignorant partisans never heard of The Glass Steagall Act.

      December 7, 2010 at 3:37 pm | Report abuse |
  6. beethovenopus27

    Excuse me, I misspoke....Democrats are milk-toast.

    December 7, 2010 at 3:13 pm | Report abuse |
  7. Terry

    I wish all of the middle and lower class people would get two jobs so we rich folks don't pay any taxes. Now that is a deal I could go for. Go Republicans.

    December 7, 2010 at 3:19 pm | Report abuse |
    • marsha

      Rich folks haven't been paying their share ever since this crap was set up by our founding fathers. It is WAY PAST time for that to end. So, PAY UP!!

      December 7, 2010 at 3:36 pm | Report abuse |
  8. Common sense

    Everyone is all about lower taxes.Yea,that is great but reading the article, this also affects Social Security. SS is already in deep trouble and with this plan less will be paid into SS. Sounds like those of us that may have a chance at SS won't if less is paid in and our Congress won't address the issue. I am not one that is going to depend on SS, but if I paid into it I should get something out of it. What is everyone's thoughts on this?

    December 7, 2010 at 3:20 pm | Report abuse |
  9. warren kellam

    What a shame for 99ers...there are no JOBS out there! I have gone to college while unemployed, volunteered for the state, and sent out over 1000 resumes....it is not my fault, and I get mad at politicians living in a bubble saying to take something for less. If that was possible I would...DUH. What a bunch of ignorant imbecils! OBAMA will be a one termer!

    December 7, 2010 at 3:24 pm | Report abuse |
  10. Sniffit

    This "news" article reads like a giant corporation, which CNN is, hard-selling the middle-class-screwing deal that the GOP has pushed for. Headlne shoudl read: "Beware...take what you can get or we'll screw you even harder"

    December 7, 2010 at 3:24 pm | Report abuse |
  11. Conan

    If lower taxes rate can stimulate the economy, why don't we eliminate all taxes for stimulus? Leaving all loan to our children is so immoral.

    December 7, 2010 at 3:30 pm | Report abuse |
    • Amidiots

      Ya...Its not like the government has bills to pay. I hope thats sarcasm...Troll or moron?

      December 7, 2010 at 3:43 pm | Report abuse |
  12. marsha

    I don't agree with extending unemployment benefits. All those people (and there are MANY) who aren't even trying to look for work. They skew the overall unemployment rate dramatically as they could be back in the workforce. They'd rather sit at home and collect those checks. Make'm go back to work!!

    December 7, 2010 at 3:31 pm | Report abuse |
    • David

      You will not say that if you or your families lost jobs

      December 7, 2010 at 3:39 pm | Report abuse |
    • Amidiots

      Right!...I mean there or so many jobs available! NOT! Where do these folks come from? Troll maybe? Moron? I don't think we need infinite unemployment benefits but people will take advantage of anything. That doesnt mean you stop helping the percentage that actually needs help.

      December 7, 2010 at 3:46 pm | Report abuse |
  13. David

    Obama has no other choices but compromise with GOP because many fake Democrate senators want to surrender to GOP. I can't believe Republican candidates kept talking about lowering deficits during the election campaign want to borrow 700 billions from China and give to those wealthy people who do not even need the money a tax break, that is just rediculous, GOP can not keep playing both ways!

    December 7, 2010 at 3:38 pm | Report abuse |
    • dale

      So David, your saying that you trust the Federal Government with your money so much that you want to give them more of it?

      December 7, 2010 at 3:43 pm | Report abuse |
  14. John

    I'd pay a little more for the rich to pay a lot more.

    Apparently the Republicans and our President think that 24 months of tax breaks for the wealthy is equal to 13 months of unemployment insurance for the people they fired.

    Course, wages paid by a business owner from profits are tax deductible, so if taxes for the wealthy were higher, and corporate taxes were higher, there'd be a greater incentive for them to hire more people. But let's not think about that.

    December 7, 2010 at 3:40 pm | Report abuse |
  15. David

    I think one thing Obama should be happy to compromise with GOP about giving tax break to the wealthy Americans is that Obama will get some tax breaks too since Obama is also making more than $250,000 a year. Stupid Obama who keeps doing things against his own interest, just let it go!!! stop fighting with GOP!

    December 7, 2010 at 3:47 pm | Report abuse |
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