- Senate and House Republicans have each passed a version of the
- The Senate tax plan
- We ran the numbers to see how the Senate's tax plan could affect an American family of four with two kids under the age of 17, compared to current law and the House's tax plan.
Here's what Trump's tax plan means for a family of four making $25,000, $75,000, or $175,000
We ran the numbers to see how much the Senate's tax plan could save an American family of four.
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Tax reform seems imminent.
House Republicans passed their version of the Tax Cuts and Jobs Act in November, and Senate Republicans voted to pass their version early Saturday.
Before President Donald Trump can make tax reform official, Republicans will have to agree on one plan. GOP leaders have said the next step will be to take the two bills, which contain significant differences, to a conference committee where they will combine the "best of both" into a final bill.
We previously calculated how much a a family of four might save on taxes in 2018 if the House's current proposal became law. We've also explained how to use your 2016 tax return to estimate how your taxes might change next year if Trump's tax plan is signed into law.
In the chart below, we ran the numbers to see how the Senate's tax plan would affect an American family of four with two kids under the age of 17.
For families with a household income of $25,000 and $75,000, we assumed they would claim the standard deduction in both 2017 and 2018. According to the most recent IRS analysis of individual tax returns, 70.4% of taxpayers claimed the standard deduction on their tax return.
The Senate's bill would allow married taxpayers who file jointly and have two children to deduct $24,000 — less than the current combined $28,900 deduction, which includes the standard deduction and four personal exemptions. The House's bill proposes a standard deduction of $24,400.
For a family of four with a household income of $175,000, we assumed they would itemize deductions in 2017, and claim the standard deduction in 2018. Among those who itemize deductions, the average claimed was $27,053 in 2015. The most common itemized deductions and the total amount deducted by US taxpayers in 2015 were:
Tax savings for a family under Senate Republicans tax plan
The estimates in the chart show how tax reform might affect an American family of four if the Senate's tax plan becomes law:
Tax savings for a family under House Republicans tax plan
Our previous calculations using the House's tax plan showed that similar families would owe slightly more taxes than they would under the Senate's plan:
Most Americans will see a slight increase in their take-home pay under the current proposals, but that could change in the future as many of the provisions are set to expire after 2025. Some analysts have said that nearly half of Americans would see a tax increase at that time.
Trump's tax plan, if it passes, may free up some cash in the typical household's monthly budget. But the biggest winners are likely to be the wealthiest Americans who are poised to save significantly under the proposals.