WASHINGTON — Congress last week agreed to a last-minute deal to increase taxes on high earners to avoid the “fiscal cliff” of broader tax hikes and spending cuts. Under the new agreement, the tax rate for individuals with income of more than $400,000 and couples making more than $450,000 will increase to 39.6%, up from the current rate of 35%. Of particular concern to business owners, the rate of taxes on inherited wealth — the estate tax — will increase to 40%, from 35%, but the threshold for estates that are exempt remains at $5 million, rather than reverting to the previous level of $3.5 million. In addition, the payroll tax cut for consumers was allowed to expire, which could impact spending in the near term, said Andrew Harig, director of government relations, Food Marketing Institute. “We’re waiting to see what impact that has on consumer spending,” he said.
Related story: Tax Agreement Raises Levy for Some Businesses, Estates
