What would the ‘fiscal cliff’ cost you?

If President Barack Obama and lawmakers fail to reach a deal this month to avert a series of automatic spending cuts and tax increases, how much more will you need to pay in taxes?

It depends, of course, on how much you earn. But the nonpartisan Tax Policy Center estimates that the average American would see tax bills rise by $3,446 next year.

Taxpayers earning more than a $1 million will endure a $254,000 tax increase, on average, or about 11 percent of their income. Those earning between $40,000 and $50,000 will see a $1,700 tax jump, or about 4.4 percent of their income.

After-tax income would decline across all income levels, according to the Tax Policy Center.

The nation’s lowest earners would see about a $412 drop on average (a 3.7 percent cut in after-tax income), while the top 1 percent of earners would need to shell out an additional $120,000 (a 10.5 percent bite in after-tax income). Middle-class families earning between $40,000 and $65,000 annually would see taxes increase by about $2,000, leaving them with 4.4 percent less money to spend.

Why would Americans need to pay more in taxes? Because a series of tax cuts and tax credits enacted in recent years are set to expire Jan. 1. They are the tax cuts put in place during George W. Bush’s administration; a payroll tax holiday signed by Obama; and measures enacted as part of the 2009 economic stimulus that expanded the earned income tax credit and the child tax credit for working families.

Finally, more than 26 million mostly middle-class households for the first time may face the alternative minimum tax, or AMT, which could add about $3,700, on average, to tax bills. Congress has thus far failed to approve an inflation “patch” that expired last year and prevents millions of people from having to pay the tax.

But congressional tax aides said the Internal Revenue Service has advised Congress that trying to fix the AMT after the filing season begins in January would lead to processing delays of more than two months for nearly half of all returns — significantly postponing the delivery of refunds.

Bottom line: If Congress doesn’t act, most Americans are likely to pay more next year in federal income taxes.

More in Local News

Child porn found in forest treehouse and Mill Creek home

Daniel Wood, 56, has been charged with two counts of possession of child pornography.

The rules: You can’t put just anything on your vanity plate

The state keeps a “banned list” of character combinations that will automatically be denied.

Driver killed in crash identified as Monroe man

Anthony Ray Vannelli Jr. died of blunt force injuries. He was 37.

Edmonds man gets nearly 14 years for murder of roommate

Derrick Crawford, 22, admitted that he shot and intended to kill 27-year-old Joshua Werner.

Motorcyclist seriously hurt in Everett hit-and-run

Police are searching for the driver and a gray Dodge Stratus with extensive front-end damage.

Masked gunman sought in shooting at house near Darrington

The suspect — a neighbor — is still at large. There were no injuries reported, but a television was hit.

‘Working together again like we did back then’ to save fish

Tribes and agencies convene to continue the fight to save salmon — in the name of Billy Frank Jr.

Sound Transit lobbies Congress to keep Lynnwood line funded

President Trump wants to cut a $1.17 billion grant. Bipartisans in Congress could preserve it.

Slide prompts closure of Whitehorse trail east of Arlington

More than two miles of the route will be closed indefinitely “due to significant earth movement.”

Most Read