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Reality Check: What's in the fiscal cliff bill?

Published On: Jan 02 2013 07:56:40 PM CST
Updated On: Jan 02 2013 08:33:29 PM CST
MADISON, Wis. -

The country has averted the fiscal cliff after some holiday votes in Congress.

WISC-TV took a look at what is in the bill and how it will affect Americans.

In a largely bipartisan vote, Congress averted major tax increases for most Americans and delayed decisions on spending cuts. But there are some pieces people may not know about.

First, most taxpayers will pay the same tax rates in the new year, with the exception of individuals making more than $400,000 a year and couples making more than $450,000.

Congress also permanently fixed what's called the "alternative minimum tax," a 1970s-era definition of the minimum amount a person should be taxed. That's now indexed to inflation, but it could still affect high-income earners.

Congress also moderately increased capital gains taxes to 20 percent and set the new estate tax at 40 percent with the first $5 million of property exempted. Child tax and education credits have also been extended for five years.

But there is one tax that went up on just about everyone. A temporary 2 percent decrease in Social Security taxes deducted from paychecks was not included in the cliff deal, so people can expect all their paychecks to be a bit smaller in 2013.

Meanwhile, the price of milk won't go up. Congress extended subsidies that were scheduled to end and could have jacked the price of milk up to $7 a gallon. Unemployment benefits were extended and doctors will continue to get the same Medicare reimbursements, meaning there will likely be no impact on the number of patients they take.

Also included are tax breaks for film companies, railroads, NASCAR and some green energy companies, including algae growers. The tax breaks aren't new and have been included in prior bills, but they are raising some eyebrows given this high-profile deal.

What this bill didn't do was cut anything. Congress delayed automatic spending cuts to defense and relatively all government programs and also cut no deal to raise the debt ceiling, which the country hit on Monday.

Congress has two months to find a way to pay the country's bills and cut spending or the government will shut down.

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