With the most significant tax overhaul in three decades about the be signed into law by President Donald Trump, much is being said — good and bad — about whether the new tax bill will help or hurt Americans and their pocket books.
Let's look at nine things Americans should know about the tax bill.
1. Income tax rates cut
As reported by The Atlantic, most individuals will see a small decrease in the income tax rate they pay.
The lowest rate will stay at 10 percent (for individuals and joint filers who make $9,525 or less), while the second lowest bracket decreased from 15 percent to 12 percent (for individuals and joint filers who make between $9,526 and 38,700).
Those who are in the third tax bracket will only be taxed 22 percent instead of 25 percent. Meanwhile, those in fourth tax bracket will be taxed 24 percent instead of 28 percent. As for those in the fifth tax bracket, they will be taxed 32 percent instead of 33 percent.
Although the sixth tax bracket maintains a 35 percent rate, the top tax bracket rate has decreased from 39.6 percent for people who earn $426,701 to 37 percent for people who earn $500,000 or more in a year.
To view a chart of the new tax brackets that will take effect on Jan.1, click here.
2. Standard deduction increased
Under the new tax plan, the standard deduction will increase from $6,500 for individuals and $13,000 for married couples to $12,000 and $24,000, respectively.
The Atlantic reports that the standard deduction increase will "represent the biggest tax cut in the plan" and will "offset the reduction in the state-and-local tax deduction."
However, the impact of the doubling of the standard deduction will be limited by the elimination of personal exemptions and itemized deductions, critics have warned.
As for people who prefer to itemize their deductions, the new tax plan might offer a variety of unwanted changes and new limits on deductions that many might rely on every year, such as changes to limits on the mortgage interest deduction and state and local tax deductions.
The increased standard deduction also means fewer families will use the deduction for charitable contributions. Some charities, including churches, are concerned this will mean fewer donations.
Under the new plan, homebuyers can deduct interest on home loans of up to $750,000, as opposed to the old plan where the limit was $1 million.
Under the old plan the deduction for state and local property taxes was unlimited. Under the new plan, the deduction on property taxes is capped at $10,000, which could have a negative impact on home owners in high tax states and cities.
According to a CNN report citing statistics from ATTOM Data Solutions there are as many as 4.1 million Americans that pay more than $10,000 in property taxes.
3. Child tax credit increased
The new tax plan increases the child tax credit from $1,000 to $2,000 per child with about $1,400 of that being refundable.
The child tax credit was an issue of contention. Trump and Republican leaders initially opposed the change, but Florida's Marco Rubio threatened to vote against the bill if it were not included.
Although the compromise of a $2,000 child tax credit was accepted by Rubio, critics argue that some of the poorest American families will not be able to fully utilize the child tax credit.
The left-leaning Center of Budget and Policy Priorities argued in an analysis posted last Friday that the new child tax credit will leave 10 million children in working families with a child tax credit increase of just $75 or less.
The doubling of the child tax credit has been praised by conservative, pro-family groups such as the Family Research Council.
"The doubling of the child tax credit to $2,000 will provide immediate relief for parents and will bolster the economy further as these children become taxpayers one day," FRC President Tony Perkins said in a statement. "Strong families are the cornerstone of our society and providing relief for families with children is a major win for working low-income and middle-class families."
"The bill alleviates many marriage penalties in the tax code, which should never have been added to the tax code in the first place. We have long advocated for our government to foster the best environment for children and penalizing marriage has made no sense," Perkins added. "With this bill, many families will save thousands of dollars in their taxes next year simply due to the elimination of marriage penalties from nearly all of the income tax brackets."
4. Personal exemptions eliminated
The Republican tax plan eliminates the ability for filers to claim personal exemptions. Personal exemptions for 2017 were valued at $4,050 per taxpayer, spouse or qualifying dependent.
According to CNBC, the elimination of the exemptions will impact multi-child families and single-parent families the most.
"Doubling the standard deduction is nice if you're a married couple with no kids,"Stan Veliotis, director of the Center for Professional Accounting Practices at Fordham University, told CNBC. "But bigger families won't get as much of a benefit on that."
The Tax Policy Center reports that under the current law, a married couple with an adjusted gross income of $75,000 and two kids under 17 would have a total of $16,600 in personal exemptions.
"When including the standard deduction of $13,000 for married-filing-jointly, the filers' taxable income falls by $29,600, according to case studies from the Tax Policy Center," a CNBC report states. "Meanwhile, under the new tax bill, this same couple would have only the standard deduction of $24,000 for joint filers who are married."
When the new $2,000 child tax credit is added, the Tax Policy Center finds that the couple with two kids earning $75,000 could see a tax decrease of about $2,119 in their taxes.
However, Elaine Maag, senior research associate at the Tax Policy Center, told the Washington Post that the new tax plan would not be so beneficial for a married couple with an income under 30,000 and two college-age children over 17.
"The pain point could be for families with dependent children 17 to 24 years old," The Washington Post reports. "The math works out less kindly for them. No one gets personal exemptions, and their children no longer qualify for a child tax credit, but the new family tax credit is much smaller."
Although there is a new $500 family tax credit for dependents who are too old to qualify for the child tax credit, the Tax Policy Center analysis finds that a single mother with two children and a married couple with two children that earn only $36,976 per year might actually see their taxes increase.
5. Estate tax threshold increased
The bill also shields families with larger inheritances from having to pay an estate tax, "a tax on your right to transfer property at your death."
According to NBC News, the threshold to pay an estate tax after a loved one dies is just over $11 million for individuals and over $22 million for married couples.
Previously, the exemption cap was set at $5.5 million for individuals.
6. Corporate tax rate slashed
One of the biggest victories for Republicans in the bill is that corporate tax rates will be decreased by about 14 percentage points — from 35 percent to 21 percent.
According to The Atlantic, the bill not only cuts taxes for business owners, it also allows companies to write off expensive equipment purchases and buildings.
"The true benefits of lower corporate tax rates come because corporations will anticipate being able to keep more of what they earn. This expectation of a larger payoff from each dollar invested will motivate them to invest more, and the investment will contribute to faster economic growth," Tracy Miller, senior policy research editor with the Mercatus Center at George Mason University, wrote in an op-ed for The Hill.
"More specifically, public corporations employ a substantial percentage of Americans, so how much they are willing to invest determines whether they will hire more people. The top statutory corporate tax rate in the United States, at 39.1 percent (including both federal and state taxes), is higher than that of any other developed country."
7. Most Americans to pay less in taxes next year
As The Washington Post's "The Daily 202" notes, the nonpartisan Tax Policy Center's analysis of the final bill finds that a strong majority of Americans, eight in 10, will pay less in federal taxes next year.
The analysis explains that roughly 80 percent of Americans will pay lower taxes next year with an average rate decrease of about $2,100.
Meanwhile, about 5 percent will face an average tax increase of about $2,800.
8. National debt to increase
Among one of the biggest critiques of the Republican tax plan is that it will increase the national debt.
According to the Congressional Budget Office, based upon analysis from the Joint Committee on Taxation, a congressional committee in charge of evaluating the tax proposal, the bill would add $1.7 trillion to the national debt over the next 10 years.
That analysis doesn't account for the economic growth likely to result from the tax cuts, which Republicans argue will offset some of the lost revenue.
Meanwhile, other analyses of the tax plan have been less optimistic of the tax bill's impact on the national debt.
"The final conference committee agreement of the Tax Cuts and Jobs Act (TCJA) would cost $1.46 trillion under conventional scoring and over $1 trillion on a dynamic basis over ten years, leading debt to rise to between 95 percent and 98 percent of Gross Domestic Product (GDP) by 2027 (compared to 91 percent under current law)," the Committee for a Responsible Federal Budget, argues. "However, the bill also includes a number of expirations and long-delayed tax hikes meant to reduce the official cost of the bill. These expirations and delays hide $570 billion to $725 billion of potential further costs, which could ultimately increase the cost of the bill to $2.0 trillion to $2.2 trillion (before interest) on a conventional basis or roughly $1.5 trillion to $1.7 trillion on a dynamic basis over a decade. As a result, debt would rise to between 98 percent and 100 percent of GDP by 2027."
Analysis from the right-of-center Tax Foundation estimates that the tax bill will add about to $448 billion to federal deficits over 10 years when economic growth is factored in.
9. Who benefits the most?
There is debate about whether this tax bill will be beneficial to middle class and poorer families or will mostly benefit the top one percent.
Richard Reeves, co-director of the Center on Children and Families at the Washington-based think tank the Brookings Institution, argues in an op-ed that the that the richest of the rich benefit the most from his bill.
"In the Senate version of the bill, on which the compromise version is largely based, families in the middle 20 percent of the income ladder will see a tax cut of less than $1,000 next year," Reeves wrote. "Those in the top 1 percent will see an average $28,000 cut."
However, Chris Edwards, director of the Cato Institute's center on tax policy studies, argues in an op-ed that the middle class will benefit most from the bill. He pointed to Joint Committee on Taxation distributional analysis of the bill for the calendar year 2019.
"Middle-income households will receive by far the largest percentage income tax cuts in 2019," Edwards wrote.