Posted: Apr 10, 2013 8:24 PM by Melissa Anderson - MTN News
Updated: Apr 10, 2013 8:25 PM
Today is "tax freedom day" in Montana. That means that it has taken from the beginning of the year until now for taxpayers to pay off their average tax debt to the government before they can start pocketing their own cash.
"Tax freedom day is the day of the year where you've worked enough during the year to pay your federal, state, and local taxes, including property tax, income tax, sales tax, Social Security tax," said CPA John Steinhoff of Helena.
National tax freedom day is April 18th, five days later than last year.
Some say this may be because of our increased tax burden and federal debt.
"It's just the increase in taxes. Again you are making more money so you are paying more taxes and the government's borrowing more money creating more expenses. It just takes us that longer as a society to pay those obligations," said Steinhoff.
Montana ranks 30th in the nation for the time it takes to work and pay off current tax year debt.
While Connecticut residents will take the longest to pay their debts celebrating a tax day in May, Tennessee and Louisiana had their tax days at the end of March.
To put it into perspective, tax freedom day in America in 1900 was January 22nd with taxpayers paying only 5.9%.
The average taxpayer today pays an estimated 29% of their paychecks to cover taxes.
After tax freedom day, the money made is considered above and beyond, which will more than likely be used for groceries, gas and other household items.
But rarely will much of it make it into a savings account.
"It's kind of a benchmark to say you've paid your tax obligations so now the rest of that money is your living expenses and yeah, you could sock some of it away but we still got to eat and we still got to live and we still got to support our families," explained Steinhoff.