If you pay taxes, you're probably still wondering what in the world happened in Washington on Tuesday, right?
Well, according to the official White House blog, here is what you need to know, plain and simple.
Last night, Republicans and Democrats in the House of Representatives joined the Senate in passing the American Taxpayer Relief Act of 2012. That means middle-class families won't see an increase in their income tax rates. We've avoided the fiscal cliff.
President Obama will sign the legislation soon. Last night, he described the agreement as, "one step in the broader effort to strengthen our economy and broaden opportunity for everybody."
"Under this law, more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up," he said. "Millions of families will continue to receive tax credits to help raise their kids and send them to college. Companies will continue to receive tax credits for the research that they do, the investments they make, and the clean energy jobs that they create. And 2 million Americans who are out of work but out there looking, pounding the pavement every day, are going to continue to receive unemployment benefits as long as they’re actively looking for a job."
We know that that a lot of people have questions about the deal, so we've pulled together some of the most important facts. Here are the seven things you need to know:
1) As the President promised, income tax rates for middle-class families will stay low permanently. That's good news for 98 percent of Americans and 97 percent of small businesses.
2) As the President promised, for the first time in 20 years, a bipartisan agreement will increase tax rates on the wealthy. That rate increase will be immediate and permanent. Individuals making more than $250,000 will be asked to pay a little more to help reduce the deficit through a combination of increased tax rates and reduced tax benefits.
3) This agreement cuts the deficit. It builds on the $1 trillion of spending cuts the President signed into law in 2011 through the Budget Control Act. This new agreement cuts the deficit by $737 billion by asking the wealthiest to begin to pay their fair share. Moving forward, the President is committed to reducing the deficit even more, splitting savings in a balanced way between spending cuts and even more revenue from the wealthiest
4) As part of this deal, a group of tax cuts that help middle-class families keep more money in their pockets and afford to pay for higher education was also extended. The Child Tax Credit, Earned Income Tax Credit, and the new American Opportunity Tax Credit will stay in effect for at least the next five years.
5) We'll continue making investments that create jobs in domestic clean energy and innovation because the agreement extends the Production Tax Credit and the Research & Experimentation Tax Credit.
6) Lawmakers agreed to extend emergency unemployment insurance for 2 million people looking for work.
7) This agreement doesn't cut Social Security benefits, Medicare, or Medicaid. That's because the President stood strong against reducing our deficit on the backs of seniors, students, the poor, and working families.
To learn more about this agreement and what comes next, be sure to watch President Obama's full remarks in the YouTube video above.