But not everybody.
Using the analysis, Business Insider broke down the financial implications of Trump’s most recent tax plan — he has teased the release of an updated plan in the coming weeks — for a variety of tax filers.
By and large, the more you make, the better you would fare under Trump’s proposed plan. But one group of filers could actually see their tax bill go up, depending on their tax bracket: families with children — especially single parents.
It’s important to keep in mind that no law has been passed, so nothing is a given. If Trump releases a new plan, it’s possible there will be some significant changes.
Moreover, Trump and House Republicans don’t agree on everything, and he may not get everything he wants in a tax plan.
That said, read on to see the breakdown of how some families could lose money under Trump’s tax plan.
• Instead of seven, we'd have three income tax brackets.
Current: 10%, 15%, 25%, 28%, 33%, 35%, 39.6%
Proposed: 12%, 25%, 33%
• The standard deduction would go way up. It jumps from $US6,300 to $US15,000 for singles; for married joint filers, it jumps from $US12,600 to $US30,000.
• Personal exemptions and exemptions for dependents would be eliminated, as would the head-of-household deduction.
• Families with children under age 13 could deduct childcare costs, capped at the state average.
• The alternative minimum tax, a complicated surtax that raises rates on middle- to upper-middle-class earners, would be axed. It currently affects nearly 5 million people.
• Gift taxes and estate taxes would be gone; capital gains held until death would be exempt up to $US5 million per person.
Here's the big picture overview. If we only look at income, all tax brackets see their tax rate decline, with the high earners faring the best.
The Tax Policy Center analysis isn't just looking at income tax. It accounts for individual and corporate income tax, payroll taxes for Social Security and Medicare, the estate tax, and excise taxes.
But not all families would be so lucky. When you isolate tax filers with children, most still get some tax break on average, but those earning between $20,000 and $50,000 see their taxes go up.
One reason some filers see a tax increase? The elimination of personal exemptions.
While the proposed plan increases the standard deduction for married couples from $US12,600 to $US30,000, many married couples also have children, who count for additional exemptions they would lose under the new plan. Since each exemption is currently worth $US4,050, couples with three children or more would get a larger deduction under the system we have now than under the proposed plan.
Five exemptions -- one for each parent and each of the three children -- is worth $US20,250. After factoring in the $US12,600 standard deduction, a couple today would reap a break of $US32,850, compared with the flat $US30,000 under Trump's plan. That discrepancy would grow with each child added into the picture.
This chart also includes single parents, who would lose their head-of-household filing status under the new plan (we'll look at this in detail next).
These lost exemptions would be offset to a degree by a proposal to allow families to deduct the average cost of childcare, but not enough to cover the difference in many cases, according to a Tax Policy Center study.
Head-of-household filers, as a group, fare the worst on average. It's not a huge increase, but these filers who earn between $20,000 and $200,000 would see their federal taxes go up rather than receive a tax cut. For many of these families, though, every dollar counts.
What is the head-of-household status, and why are these people hit the hardest overall?
The head-of-household status applies primarily to single parents (you're not eligible if you're married) and comes with a higher standard deduction than single filers without dependents -- $US9,300, compared with $US6,300.
Under the current law, a single parent with one child would receive $US17,400 in deductions -- two personal exemptions worth $US8,100, plus the $US9,300 head of household deduction -- compared with the flat $US15,000 deduction under Trump's plan.
That loss of income becomes starker with each child added to the picture. A single parent with three children is looking at over $US10,000 in lost deductions under Trump's plan. Whereas they used to get a $US25,000 tax break, under the proposed plan the break would be only $US15,00.
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