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East Tennesseans react to payroll tax hike

9:03 PM, Jan 2, 2013   |    comments
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A family who makes $40,000-$50,000 will see $31-$38 less every two weeks.

The holidays are over and so is the "Payroll Tax Holiday."

Even though legislators avoided the fiscal cliff, Americans' taxes will still increase.

Two years ago, Congress temporarily reduced the Social Security payroll tax from 6.2% to 4.2% in order to stimulate the economy.

As of Tuesday, that tax is back up to 6.2%.

"You will notice it your very first paycheck of the year. It's going to be a little smaller," said CPA Matthew Newhouse, with Souther & Newhouse, PC.

If your household income is $30,000, you'll receive about $50 less each month; $50,000 households will have $83 less; and for $100,000 households, they'll receive $167 less take home pay a month.

It has caused shoppers at Midway IGA in Corryton to rethink their spending.

 "Yeah we'll probably have to check into that couponing thing," Cora Holmes said.

Holmes' household will have $66 less every two weeks.

"Three kids and $60, that's groceries," she said.

Shelley Poole's family is in the same situation.

The past two years of tax cuts gave them approximately an extra $3,000.

"We had to look at a different insurance plan. My husband works for a very good company but we had to take a lower insurance plan," Poole said.

Michael Woodby already buys discounted produce and meat.

Now, his family will have about $50 less each month.

"That's that much groceries we could put in the fridge right now. We've actually lost a little weight because we can't afford to eat the way we have been," Woodby said.

According to Laura Lyons, a financial planner, the 2% payroll tax cut has cost the nation about $120 billion per year in revenue.

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