The Senate, in a predawn vote(89-8 with 3 Democrats and 5 Republicans Voting NO)two hours after the deadline passed to avert automatic tax increases, overwhelmingly approved legislation at around 2 a.m. on Tuesday Jan 01,2013 that would allow tax rates to rise only on affluent Americans while temporarily suspending sweeping, across-the-board spending cuts.
The measure, brought to the House of Representatives floor less than 24 hours after its passage in the Senate, was approved 257 to 167, with 85 Republicans joining 172 Democrats in voting to allow income taxes to rise for the first time in two decades, in this case for the highest-earning Americans around 11 p.m on Jan 01,2013
What the "fiscal cliff" bill means to taxpayers
The Personal Exemption Phaseout (PEP) and the itemized deduction limit
are set at $250,000 for singles and $300,000 for joint filers. These
rules are meant to reduce or eliminate the value of personal exemptions
for taxpayers earning more than the income threshold.
The average U.S. household that earns $50,000, will pay an extra $1,000 in taxes in 2013. For an individual earning the maximum 2013 cap of $113,700 or more, the increase would be $2,274, or nearly $200 per month.
Individuals who earn more than $400,000 and couples who make more than $450,000 will see tax rates increase from 35 to 39.6 percent.
Capital gains and dividends will rise to 20 percent from the current 15 percent for the same income thresholds.
The compromise deal passed by the Democratic-led Senate and then the Republican-led House extends tax cuts for those earning under $400,000 (£246,000) - up from the $250,000 level Democrats had originally sought.
A huge spending cut that would see $1.2tn cut from the federal budget over 10 years has been deferred for two months, allowing Congress and the White House to re-open negotiations.
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