GRAND RAPIDS (WZZM) -- If today was your payday, you probably would notice less take-home money on your paycheck.
With the new year, people are starting to pay an additional 2% out of their paycheck -- a so-called "payroll tax" -- going to Social Security.
"The biggest change is in the FICA tax," says Tom Rosenbach, a managing partner at accounting and tax consulting firm Beene Garter in Grand Rapids.
The firm also processes payrolls for businesses. Before the "fiscal cliff" tax bill was passed by Congress on New Years Day, Rosenbach says they didn't know what to expect.
"The best info we got was that they would not extend the payroll holiday, as it's called, but we didn't know much else," he says.
Many people did not realize they were getting a break. The payroll tax cut was enacted in 2011 and extended through 2012, but it was not renewed for 2013.
What does the tax increase mean for the average American? If you make $50,000 a year, it means take-home pay is a little over $80 less a month.
For some, the tax increase could mean cutting the family budget. Some suggestions for making cuts:
- Get rid of your smartphone and the expensive data plan that goes with it.
- Stop buying fancy coffee drinks every day. You could save $100 a month.
For the average American, the tax hike adds up to $1,000 a year. For many families, that means making immediate spending and savings changes.