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Why your paycheck is getting smaller, no matter what


money.cnn.com / By Emily Jane Fox / December 30, 2012: 4:12 PM ET

For middle class Americans, there may be no escaping higher taxes, come January.

President Obama is trying to push through legislation to keep broader middle class income taxes from rising by Monday night. But they may still have to pay at least 2% more in payroll taxes.

That’s because the government had temporarily lowered the payroll tax rate in 2011 to 4.2% from 6.2%, in an effort to keep more cash in the pockets of Americans and provide a boost to the economy. The tax cut, which applies on the first $113,700 in annual earnings, is expiring in December.

Come 2013, most of the country’s 160 million workers will see smaller paychecks. No one is expecting the payroll tax cut to be extended, even as lawmakers in Washington meet for budget talks to avoid the fiscal cliff.

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