The U.S. House passed the Tax Cuts and Jobs Act that was approved by the Senate Tuesday night, meaning the bill is on its way to President Donald Trump for his signature – at which point it will become law.
It passed almost exclusively along party lines in both the House and Senate, with no Democrats voting in favor.
The changes should be in force for the 2018 tax year.
Will I be getting a tax cut?
The chances are that, yes, you will. However, the size of that tax cut will depend on your income, family size, and living circumstances.
The Tax Policy Center says that 8 in 10 Americans will pay lower taxes in 2018.
We're not talking mega-savings for most of us though. Around 80 percent of those getting cuts will see their bill reduced by less than 2 percent.
The Tax Foundation has put together a series of scenarios showing how a person's income could change.
But here's the kicker: The scenarios above do NOT include any changes to health insurance premiums as a result of the repeal of the individual mandate.
This repeal is expected to see healthier people decide to opt out of buying health insurance, likely pushing up the cost of premiums for everyone else.
CNBC reports it could add an extra $1,000 on average to the annual cost of coverage for people buying individual plans through health exchanges, potentially wiping out any tax savings.
If people are getting tax cuts, why is it unpopular?
The latest polling shows the majority of Americans oppose the bill, CNN reports, which is remarkable considering most people will probably save some money, initially at least.
Some of this could be down to poor messaging from the GOP, but the potential rise in health insurance is one reason lower/middle-class people are also worried.
But one reason the Republican Party is suffering bad optics is because the tax cuts overwhelmingly favor the wealthiest Americans.
Here's the Tax Policy Center's breakdown of who benefits the most from the changes – noting it disproportionately favors the top 5 percent of earners.
You'll notice that much of the tax benefits will have disappeared by 2027. That's because individual income tax cuts are scheduled to expire in 10 years' time under Senate rules.
The cuts to business taxes meanwhile are permanent.
There are also concerns about the impact it will have for future generations, with Axios noting the cuts are expected to add greatly to national debt over the next 10 years.
Nonetheless, the Washington Post reports Republicans are confident the bill will get more popular once it's passed and supporters start spending heavily on getting the message out about the overall individual savings.
What exactly is in the bill?
Some of the headline changes include a cut in corporation tax rates from 35 to 21 percent and "pass-through" taxes for small businesses, the repeal of the individual health insurance mandate, and changes to individual income tax brackets.
Here's how the income tax brackets change for single filers.
And for joint filers.
On top of this, the standard deduction will almost double to $12,000 for single filers and $24,000 for joint filers, while the child tax credit will double to $2,000.
The estate tax exemption meanwhile increases to $5.49 million for individuals, and double that for couples.
But people who itemize their returns will only be able to claim back $10,000 in state and local property taxes (SALT), which will disproportionally impact wealthier people in higher-tax states, like Minnesota.
Deductions for student loan interest remain though – despite being removed in earlier forms of the bill – and you can also deduct medical expenses that exceed 7.5 percent of your income.