Here's How The GOP Tax Plan Is Going To Affect You

Justin Sullivan/Getty Images News/Getty Images

There's been a lot of confusion over the GOP's tax bill, both because tax law is enormously complicated and because the legislation itself has been re-written several times since it was originally announced. But the text of the final bill has been released, and if you're wondering how the GOP's tax plan will affect you, read on.

Most of the tax bill's effects will be felt by corporations and the wealthiest Americans, both of whom will see significant tax cuts if the legislation becomes law. That said, the bill is over 1,000 pages long, and some of its provisions will indeed affect poor and middle-class Americans.

It's worth noting that the bill does not increase taxes for college and graduate students, or Americans with student loans. Earlier versions of the legislation would have done this, resulting in understandable outrage from current, former and future students. However, those provisions were scrapped from the final bill.

This isn't a comprehensive list of all the tax bill's provisions; it's simply a rundown of some of the more prominent parts of the legislation that will affect everyday Americans — let's take a look.

The Individual Mandate

One of the most significant provisions in the GOP's tax bill is its repeal of the individual mandate, the Obamacare provision that requires everyone to have health insurance or pay a tax penalty. On a national scale, repealing the individual mandate will result in 13 million additional uninsured Americans over the next decade, according to the Congressional Budget Office.

On an individual level, repealing the mandate will give you the freedom to live without health insurance and not pay a tax penalty. If you do buy insurance, though, you'll have to pay roughly 10 percent more every month in premiums, according to the CBO. However, this premium increase won't apply to people who get health insurance through their employers.

Personal Exemptions

Every year, taxpayers are entitled to one personal exemption — that is, a reduction of the amount of income on which they are taxed. Currently, claiming a personal exemption reduces your taxable income by $4,050, though that discount is slightly less for upper-income earners.

The GOP's tax bill eliminates the personal exemption, so you will not automatically be able to reduce your taxable income, meaning you could be taxed at a higher rate.

Standard Deductions

Like exemptions, deductions reduce your taxable income. When paying taxes, you currently have the option of either tallying up all of your deductible expenses for the year and subtracting that from your taxable income — that's called an itemized deduction — or accepting a reduction of a flat amount. That flat amount is called the standard deduction.

The GOP nearly doubles the standard exemption to $12,000 for single filers and $24,000 for couples. If your deductible expenses for the year exceed that amount, you'll see no change; if they don't, your taxable income will go down.

Medical Expenses

The medical expense deduction allows Americans who spend 10 percent or more of their adjusted gross income on medical expenses to deduct that amount from their taxable income. In essence, it's a tax break for a subset of poor, sick Americans.

Although earlier versions of the bill eliminated the medical expense deduction, the final bill retains it. However, it lowers the deductible amount to 7.5 percent of taxable income in 2018 and 2019 before raising it back to 10 percent in 2020. This simply means that, if you get extremely sick in 2018 or 2019, there's a chance you'll pay slightly more in taxes than you would in any year before or after.

Casualty Loss Deduction

Currently, taxpayers who incur property damages from a flood, wildfire, hurricane or other natural disaster can deduct those damages from their taxable income, so long as the damages exceed 10 percent of the taxpayer's adjusted gross income for the year. The GOP bill only allows taxpayers to claim this deduction for disasters that have been declared state of emergencies by the president.

If you've suffered losses in the California wildfires or any of 2017's hurricanes, you'll still be able to deduct those losses if they exceed 10 percent of your adjusted income. But if disaster strikes in 2018 or later, you'll only get those deductions if the disaster is "federally declared" by the president.

Income Tax Brackets

The tax bill changes the income tax brackets for individual and joint filers. However, these changes most prominently affect taxpayers making over $200,000 a year. If you make less than that, your income tax rate will only increase or decrease slightly. Here's a comparison chart between the old and new income tax brackets.

In totality, the GOP tax bill will have the biggest effect on your after-tax income if you operate a large business or are very wealthy. If you fall into one of those categories, your taxes will almost certainly go down, perhaps by quite a bit.

For everyone else, the effects of the tax bill will probably be minimal, although that may not be the case for people in certain narrow situations. If you're simply curious about whether your taxes will go up or down under the new legislation, CNN has a calculator for that.