This week, the Senate is busy making changes to a tax bill that would make massive changes to our existing tax code. While nothing is set in stone yet (it’s expected to pass the Senate after Thanksgiving), in a recent round of revisions, there have been some noteworthy changes.
Perhaps the most headline-worthy change has been to the Affordable Care Act’s individual mandate. With this mandate, most Americans have to pay a penalty if they skip health insurance, and the new bill aims to repeal it. The Congressional Budget Office (CBO), a nonpartisan agency that crunches the numbers when bills like this pop up, estimated that this change would reduce the federal deficit, but it would also lead to 13 million more people uninsured by 2027 and increase insurance premiums. Here’s their full estimate in detail (PDF).
Aside from that, the changes proposed include:
Seven tax brackets (10%, 12%, 22%, 24%, 32%, 35%, 38.5%) with a slight cut to individual tax rates that would expire in 2025. The corporate tax cut (a big one, from 35% to 20%) would be permanent.
The child tax credit, which was previously proposed to increase to $1,600, would increase even more to $2,000. But this change would again expire in 2025.
The plan would also expand the tax breaks for pass-through businesses, but those would expire in 2025 as well.
According to the New York Times, most taxpayers would get a tax cut next year with these changes. But the bill would also add more than $1.4 trillion to the federal debt over the next ten years, according to the CBO. The decrease in taxes most of us would see would also shrink over time as some of those cuts expire, of course.
The Times has illustrated a few charts that show just how much the proposed changes would affect you, depending on your income. The lowest income households (less than $25,000) would see a $60 cut in 2018. Middle income ($48,600 - $86,100) would see a cut of $840, and the highest income households would see a cut of about $178,000. Unlike other tax brackets, the savings for the highest earners would increase over time, though. Again, though, nothing is set in stone, but you can see how the proposed changes would affect you in these charts.