 From VOA Learning English, this is the economics report in special English. On January 1st, both houses of the United States Congress approved a plan to increase taxes for most Americans. This agreement avoided much larger tax increases that were going to take effect this year. After signing the bill, President Obama said it was important to have a balanced approach to the country's fiscal problems. In the final months of 2012, the country faced a combination of higher taxes and automatic budget cuts that were being called the fiscal cliff. The fiscal cliff was avoided, but more remains to be done. Congress has given itself more time to decide how to cut the federal budget. Increased tax revenue and budget restrictions are needed to reduce the federal deficit, which was over $1 trillion last year. The new law increases the tax rate on individuals with earnings of over $400,000 and on couples with earnings of over $450,000. All working Americans will have some kind of tax increase. This is because the share of social security taxes paid by employees will return to 2010 levels, an increase from last year of 2%. But the largest part of the tax increase will affect those with a lot of investment income and those with very high wages. Taxes on investment gains and dividends and payments from some kinds of securities will increase as well. Also, the top income tax rate will go to 39.5% from 35%. Overall, the effect of the law is simple. It will be the first major tax increase in 20 years. In addition, lawmakers are facing difficult budget decisions. On March 1, big automatic budget cuts or sequestration is set to take place across the federal government. For VOA Learning English, I'm Carolyn Presuti.