The "fiscal cliff" was huge news across the country during the latter part of 2012. In an effort to avoid it, both Democrats and Republicans worked to hammer out a budget deal that would include budget cuts and tax increases. As a result, several income tax rates have increased this year. Some of these tax increases for 2013 will affect taxpayers in 2014 and beyond, but others have already started to have an impact on the financial welfare of American citizens.

How the Tax Increases Affect Taxpayers

Overall, the increased taxes largely affect the upper middle class and the wealthy. Most of the higher tax rates only apply to households who are earning at least $200,000 annually. Some tax rates only apply to extremely wealthy Americans such as those who receive income through dividends and capital gains. However, one tax in particular affects nearly every working American in the country, including those who fall into a low-income bracket.

Which Taxes Have Increased?

1. Payroll Taxes - In an effort to reduce the negative effect of the Great Recession, the government approved a two-year payroll tax break of about two percent back in 2010. This tax decrease saved the average American family about $1000 annually. In 2013, this tax break was allowed to expire, which meant that the Social Security payroll tax rate on all working Americans returned to its normal pre-2010 level of 6.2 percent. In reality, this isn't actually a tax increase, but many citizens view it as one since it reduces the amount of income they can bring home each pay period.

2. Top Income Tax Rate - In another example of a tax "increase" that is really a return to the ordinary rate, the highest income tax bracket in the country has gone back to 39.6 percent. For several years, this rate has been reduced to 35 percent to give the highest-earning Americans a limited-time tax holiday. In 2013, this tax break was also allowed to expire.

3. Dividend and Capital Gain Tax - The government has long given the wealthy a tax break on their passive income such as income from investment dividends and capital gains. Instead of paying the same tax rate on these as they would on their earnings, which could be as high as 39.6 percent, these taxpayers have paid just 15 percent tax on their passive income each year. In 2013, this dividend and capital gain tax rate was increased to 20 percent.

If you fall into any of the above categories, finding out about the tax increases for 2013 can help you adjust your budget ahead of time. Doing so will help you prepare for how these taxes could affect you.