Posted: Jan 11, 2013 6:54 PM by Jen Fenter, Marnee Banks
The federal deal that brought the fiscal cliff to an end will ultimately cost the average Montanan hundreds of dollars per year.
A "tax holiday" was implemented in 2010 to help stimulate the failing economy by lowering the Social Security payroll tax by 2%.
When Congress and President Obama passed the fiscal cliff deal they chose not to extend Social Security tax cuts for employees.
Now, the majority of Montana's labor force will feel the bite as the Social Security payroll tax rate jumps from 4.2% to 6.2%.
With the median income in Montana at around $45,000 per year, many Montanans will see their paychecks shrink by about $900 per year, or nearly $40 per paycheck, for employees that are paid every two weeks.
Karen Heisler of Rural Dynamics in Great Falls said, "If you are living paycheck to paycheck, which a lot of families in Montana are doing, it is going to affect you. For a lot of us, the 'extra' money is spent on extras, and we're going to continue paying our bills but it's the extras that are going to go away."
Montana's U.S. Senators Max Baucus (D) and Jon Tester (D) voted for for the bill containing the payroll tax increase.
Baucus said, "You know, it's a trade-off. Most Montanans want a strong Social Security trust fund. The payroll tax contributes to Social Security. Montanans, Americans don't want a reduction in the payments from the Social Security trust fund. To keep the solvency of the Social Security trust fund it's important to keep that tax."
The time it took to reach a deal to avoid the fiscal cliff also pushed back the filing date for taxes in 2013.
This year, income tax returns will not be accepted until January 30th.