House Republicans have introduced a proposal to dramatically rewrite the U.S. tax code, offering across-the-board cuts and eliminating various taxes and deductions.
Called the Tax Cuts and Jobs Act, the legislation would reduce the number of tax brackets from seven to five, nearly double the standard deduction and reduce the corporate tax rate from 35% to 20%.
But how would it affect you personally?
Given the complexity of the changes, it’s hard to say exactly. If you live in a high-tax state, you might be better off under the current system, since the plan would end the state and local tax deduction. It also makes changes to the estate tax, ends a tax credit for adoption and gets rid of the Alternative Minimum Tax.
But without consulting your accountant, you can look at the changes in tax rates for your income bracket. TIME built this calculator using data from the Joint Committee on Taxation, which provides analysis to Congress.
The analysis from the Joint Committee on Taxation shows that while the plan does provide short-term relief to most tax-filers, in the long-run, as some of the provisions such as family flexibility credit are allowed to expire, some families — especially low- and middle-income families would face an increase in their tax bill.
Keep in mind that the committee doesn’t use your gross income — the salary on your contract — or your adjusted gross income — the amount you’re taxed on after you deduct various things. Instead, it uses your income plus whatever benefits you might have received, such as the cost of health insurance.
The amount of tax cut that families would receive is calculated using the Average Tax Rate estimates provided by the Joint Committee on Taxation. The JCT estimates for income include additional benefits that one receives such as employer contributions to health and life insurance, insurance value of Medicare benefits and nontaxable social security benefits.
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