As the Senate rushed to vote on a tax bill, everyone asked the same question: Will my taxes go up or down?
A week and a half later, the answer is still being sorted out. However, for individual tax filers whose main source of income is their paycheck, some preliminary estimates can be made.
Keep in mind, lawmakers are working this week to reconcile the Senate- and House-passed versions of the GOP tax overhaul. So stay tuned for changes to key proposals. This calculator will be updated when they’re out.
To see who would get a tax cut and who would see their tax bill go up, CNN turned to the Open Source Policy Center (OSPC) at The American Enterprise Institute, or AEI, a conservative-leaning Washington, DC-based think tank. The OSPC contributes to an open-source tool, called Tax Calculator, developed by economists and contributors across the partisan divide that anyone can use to better understand tax policy. See the footer of this page for full technical notes.
The results are grouped by demographic — not a reflection of any one tax return. The state level estimates are just that — estimates, based on Census data. But what is revealed are the broad contours of a bill that creates clear winners and losers, especially across the income spectrum.
Generally speaking, the higher your income the more you’re likely to benefit. At the same time, the bill is more likely to reduce the after-tax income of filers at the lower and upper extremes of the income spectrum. The doubling of the standard deduction will mean far fewer filers at all income levels will itemize their deductions.
Another takeaway: Those claiming a child tax credit for dependents are more likely to be winners in the bill. Much of the benefit to middle income earners comes from the doubling of the child tax credit and the standard deduction. The Senate bill — like the House bill — would also make the child tax credit available to higher earners..
Those at the low end of the spectrum, however, are not likely to benefit from the expansion of the credit because it would not be refundable, meaning they won’t get money back from the credit expansion if their federal income tax bill is zero after taking other tax breaks. t
In general, higher earners fare better than lower earners. But among higher earners, how they fare depends on whether they are single or joint filers and whether they have children. Due mainly to the loss of the SALT deduction for income taxes and the fact that the Senate bill preserves the AMT, in many states very high-income single filers fare worse under the bill after a few years. But the vast majority of filers making more than $500,000 are joint filters, and they tend to do much better than lower earners.
The timeframe when considering the bill’s impact on your paycheck makes a big difference in what you find. After 2025, when many of the individual tax cuts in the Senate version are rolled back, nearly everyone fares much worse. (The House version makes its individual tax cuts permanent.)
This analysis comes with some big caveats: For better or worse, we don’t try to show the results of “macroeconomic effects” — things like whether workers’ wages will increase because corporate taxes are cut (supporters of the bill promise they will), or how increased government debt will spur changes to interest rates. We just show what will happen once you go to file your taxes.
State-by-state differences in the calculator above are explained by several factors. Primarily, the bill takes away the deduction for most state and local taxes, which vary greatly by state. States that have high state and local income taxes, like New York or New Jersey, fare worse in the bill than states like Montana or Florida, where they are much lower, or zero. In our analysis, we have grouped states together if they have similar tax characteristics. So results for states with similar levels of state and local income and sales taxes are the same.
The Senate bill has key differences from the bill the House passed, including the number of tax brackets and which deductions would be repealed. See CNN’s full breakdown of the differences between the House and Senate bills.
Open Source Policy Center, alongside technical contributors around the country, developed Tax Calculator, a tool that anyone can use to understand how tax legislation might affect them. A former Treasury economist, Ernie Tedeschi, contributed to the development of this CNN calculator.
Staff members from the Open Source Policy Center at AEI ran CNN scripts on a database constructed from the IRS Statistics of Income Public Use Tax File.