How the tax changes hit your wallet

David Handlos finds comfort in numbers.

"It helps me make better decisions," he says.

So the computer engineer in Omaha, Nebraska, crunched the numbers to find out what his paycheck is going to look like in 2013.

"I'm thinking I'm probably going to be missing at least $80 a month. That's baby food and a lot of diapers right there I'm going to have to come up with somewhere else," Handlos says.

Workers across the country will see an increase to the Social Security payroll tax because the two-year holiday is over. And Roberton Williams of the nonpartisan Tax Policy Center says the increase is coming fast.

"That will hit the first paycheck you get in January. That paycheck will be about two percentage points smaller than it otherwise would be," Williams says.

Thanks to the fiscal cliff deal and other provisions that took effect January 1, this year's tax code looks pretty different than last year's. There's the payroll tax, an increase to capital gains and income tax rates and the elimination of certain deductions. But Williams says that taken all together, the result is a pretty equitable set of changes. For example, he says, someone who makes under $500,000 will see their after-tax income  go down two percent. But earners of $1 million or more will take an eight percent hit.

"It's a very progressive tax increase, hitting the wealthiest households the hardest," says Williams.

The impact of the missing money, of course, depends on a person's situation. Carrie Coghill, a financial planner in Pittsburgh, says for her high-end clients, this increase isn't exactly a game changer.

"I just don't think they're significant. There more of a nuisance I think for a lot of people," she says.

As someone who earns just above $400,000 a year, Coghill says that's certainly true for her. Ultimately, Coghill thinks she'll have to fork over an extra $6,000 and sacrifice things she can afford to lose.

"It's those true discretionary items. It will be shoes and clothes," Coghill says, laughing.

Some middle-class families say this whole tax business won't have any impact on their spending. Among them: David Caraway, a teacher in San Antonio, and his wife.

"I'm cheap. We're cheap," he says.

Caraway explains most of the extra $2,300 they'll pay in taxes was just going to go into savings anyway. On second thought, Caraway says there may be one thing.

"We do have a habit for exotic beer. Maybe that might get cut back a little bit. My favorite micro-brewery might suffer from the loss of the Caraway six-pack," he jokes.

In some households, every penny matters -- where an extra $20 a week in taxes makes it that much harder to make rent, fill the tank, or eat. David Handlos in Nebraska isn't quite in that group, but with a young family, debt and dreams of financial security, he's not thrilled to see his pay go down. But what really worries him is that this whole fiscal cliff thing -- spending cuts and higher taxes -- isn't over.

"We can't just cut funding drastically to all sorts of programs out there. On the other hand we can't just double everyone's taxes and hope that will work out well," Handlos says.

As winter settles in, he'll be watching the newest round of fiscal fights -- the debt ceiling and the like -- nervously, wondering if he's going to have to crunch the numbers again.

About the author

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.

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