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What the Looming ‘Fiscal Cliff’ Means to Your Bottom Line

Kevin Chupka
Executive Producer/Writer

The countdown to the "fiscal cliff" is being measured in hours now as leaders in Washington continue to scramble in an effort to avoid it.

Friday at 3:00 p.m. ET, Obama will meet with Vice President Joe Biden, House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell at the White House to try and find some last-second common ground. The meeting comes a day after the Senate returned to Washington in an attempt to avoid going over the "cliff." The House of Representatives is planning a Sunday-evening return as well. But will any of this prompt a compromise in time?

For his part, Majority Leader Reid has said, "It looks like that is where we're headed [over the cliff]," if only because there is simply not enough time to get a deal and push it through Congress.

Should both sides remain immovable and send us over the "cliff," what will it mean for your personal bottom line? According to the Tax Policy Center, 90% of Americans will see some sort of increase in their taxes.

For example, an employee earning between $50,000 and $75,000 would have to shoulder an additional $2,319 in taxes next year. Assuming the worker is paid every other week, that’s $89 a paycheck. A worker bringing home between $75,000 and $100,000 would see a tax increase of $3,560, or $137 per bi-weekly paycheck.

The "cliff" would impact more than the middle class, however. Those making between $500,00 and $1 million would see an increase of nearly $35,000 on their tax bill. At the other end of the spectrum, those making $20,000 to $30,000 would see an increase of more than $1,200.

On top of those figures, Social Security payroll taxes are set to increase on January 1, which will mean an immediate 2% cut in workers' take-home pay.

Are you confident that Washington will avoid the "cliff" at the last minute, or are you prepared to go over? Will it change the way you budget for your family? Let us know on our Facebook page.