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Payroll Tax Hike Will Hit Lower-Wage Earners Hardest

The wealthy won't be the only ones paying higher taxes under the New Year's Day fiscal deal.

The McConnell-Biden Plan allows the 2010 payroll tax cut to expire. The tax rate reverts to 6.2% on the first $114,000 workers earn this year. That’s up from 4.2% in each of the last two years.

“Although everyone is — it’s the same 2%, additional 2% for everyone, I think it’s going to impact lower-wage earners the most.”

Barbara Hale is a tax principal with UHY Advisors.

“For someone who’s earning $30,000 a year, they’re going to be paying an additional $600, and to the extent that’s spread over 12 months, they’re going to see a difference of $50 less in their take home pay as a result of the expiration of this payroll tax holiday.”

In addition to wage earners, the payroll tax hike also applies to independent contractors and other self-employed individuals.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas delegations in the U.S. House and Senate, as well as the Texas governorship, the state legislature, and county and city governments. Before taking up his current post, Andrew...

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