DISTRIBUTIONAL EFFECTS OF PUBLIC LAW 115-97

Scheduled for a Public Hearing

Before the

HOUSE COMMITTEE ON WAYS AND MEANS

on March 27, 2019

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

March 25, 2019

JCX-10-19
i

CONTENTS

Page

INTRODUCTION AND SUMMARY........................................................................................... 1

I. SUMMARY OF DISTRIBUTIONAL ANALYSIS........................................................... 2

II. AGGREGATE DISTRIBUTIONAL EFFECT OF THE 2017 TAX ACT ........................ 4

A. Overall Distributional Analysis .................................................................................... 4

B. Distributional Analysis of Business Tax Provisions..................................................... 8

III. DISTRIBUTIONAL EFFECT OF COMPONENTS OF THE 2017 TAX ACT ............. 10

A. Tax Reductions........................................................................................................... 10

B. Tax Increases .............................................................................................................. 14

C. Interactions of Select Individual Provisions............................................................... 17

IV. APPENDIX TABLES....................................................................................................... 23
1

INTRODUCTION AND SUMMARY

The House Committee on Ways and Means has scheduled a hearing on March 27, 2019, 

regarding the distributional effects of Title I of an Act to Provide for Reconciliation Pursuant to 

Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (the “2017 Tax 

Act”).1

 This document, prepared by the staff of the Joint Committee on Taxation (“Joint 

Committee staff”), provides discussion related to producing distributional tables and analysis of 

the distributional tables of the 2017 Tax Act relative to the law in effect in 2017 prior to the Act 

(“prior law”).

2

 This document generally focuses on distributional effects in 2019.3

Generally, changes in tax law that modify the base, rates, and eligibility or generosity of 

deductions and credits can cause increases or decreases in tax liability for individuals and 

businesses, depending on taxpayer-specific fact patterns. As part of the assistance the Joint 

Committee staff provides to members of Congress in evaluating tax policy, the Joint Committee 

staff constructs distributional tables to illustrate how policy changes may affect taxpayers 

differentially across broad income categories. In addition, the Joint Committee staff can provide 

tables estimating the share of taxpayers within such income categories that experience increases, 

decreases, or relatively no change in tax liability as a result of such policy changes. Examples of 

both types of tables are included in this document.4

 

1

 Pub. L. No. 115-97.

2

 This document may be cited as follows: Joint Committee on Taxation, Distributional Effects of Public 

Law 115-97, (JCX-10-19), March 25, 2019. This document can be found on the Joint Committee on Taxation 

website at www.jct.gov. 

3

 For further information on later years see the Joint Committee on Taxation’s Distributional Effects of the 

Conference Agreement for H.R.1, the “Tax Cuts and Jobs Act,” (JCX-68-17), December 18, 2017.

4

 The Joint Committee staff can also provide further detail of changes in tax liability by factors such as 

age, household composition, and composition of income, etc., upon request.
2

I. SUMMARY OF DISTRIBUTIONAL ANALYSIS

The primary purpose of a tax system is to raise revenue to fund government expenditures. 

Analysts generally judge a tax system—as a way of raising a given amount of revenue—in terms 

of how well the tax system handles issues of economic efficiency, fairness, and administrability. 

The design of a tax system involves tradeoffs between these different considerations. Measures 

designed to ensure compliance may increase the complexity of taxation for individual filers. 

Measures designed to promote simplicity may create distortions in investment decisions. 

Measures designed to promote growth may alter the distribution of the tax burden.

Distributional analysis can assist policymakers in evaluating fairness, one of these main

considerations of a tax system. Distributional analysis is the study of how a tax system’s 

aggregate costs and economic burdens are shared by taxpayers, taking into account their different 

incomes, consumption, and other behavior. This type of analysis can be used to determine how a 

tax proposal may affect the tax system’s horizontal equity—whether similarly situated 

individuals are taxed similarly—and vertical equity—whether individuals are taxed according to 

their ability to pay, i.e., the level of progressivity.

5

The Joint Committee staff provides distributional analysis in the form of distribution 

tables. These tables convey how tax proposals would incrementally change the distribution of 

tax liabilities and tax burdens among taxpayers of different incomes when compared with present

law’s distribution patterns. The Joint Committee staff distributional analysis is designed to help 

policymakers decide between tradeoffs of different policy goals, such as those discussed above, 

and are not intended to suggest what degrees of horizontal and vertical equity are appropriate.

The Joint Committee staff distribution tables classify taxpayers at the level of filing unit. 

Filing units for this purpose include tax return filers and imputed nonfilers, and do not include 

dependent returns and negative income returns. Generally, this results in a measure that is 

closely related to households, but in some cases more disaggregate. For example, a grandmother

living with her son and daughter-in-law may file her own return generating two filing units in a 

single household.

The Joint Committee staff distribution tables use an income concept meant to measure 

economic income, not just taxable income and not just cash income, since economic income is 

the conceptually appropriate measure of economic well-being. Economic income includes the 

annual flow of all resources at the command of an individual and represents an individual’s total 

well-being. As a practical matter, the income concept used in distributional analyses needs to 

balance the goal of a measure that accurately reflects economic well-being with a measure that 

can be accurately constructed using available data sources. The concept developed by the Joint 

Committee staff is referred to as expanded income.6

 Expanded income is the sum of adjusted 

 5

 A progressive tax system is one where average tax rates increase as incomes increase.

6

 For a detailed discussion of expanded income see Joint Committee on Taxation, Overview of the 

Definition of Income Used by the Staff of the Joint Committee on Taxation in Distributional Analyses, (JCX-15-12), 

February 8, 2012.
3

gross income, tax-exempt interest, employer contributions for health plans and life insurance, the 

employer share of payroll taxes, workers’ compensation, nontaxable Social Security benefits,

value of Medicare benefits in excess of premiums paid, minimum tax preferences, individual 

share of business taxes, and excluded income of U.S. citizens living abroad.7

 7

 The Joint Committee staff includes distributions from qualified retirement plans and individual 

retirement arrangements in expanded income. Contributions to these plans and arrangements by the individual or 

the individual’s employer are excluded from expanded income.
4

II. AGGREGATE DISTRIBUTIONAL EFFECT OF THE 2017 TAX ACT

A. Overall Distributional Analysis

Table 1 replicates information from the Joint Committee on Taxation’s Distributional 

Effects of the Conference Agreement for H.R.1, the “Tax Cuts and Jobs Act,” (JCX-68-17), 

published on December 18, 2017. This table generally shows, for 2019, the combined 

distributional effects of the 2017 Tax Act relative to prior law.

8

 The table shows aggregate tax 

liability reductions in each income category. To provide information on vertical equity, the table 

also includes columns presenting estimates of the average tax rate under present law (law in 

effect when the table was published, before the passage of the Conference Agreement) and the 

proposal (the Conference Agreement). These columns show that generally as income increases 

the average tax rate reduction increases.

 8

 Note that the Joint Committee staff does not include estate and gift taxes in distributional analysis. The 

provisions of the 2017 Tax Act that are excluded from distributional analysis are described in footnote (1) of the 

table.
5

Table 1.─Distributional Effects of The Conference Agreement for H.R. 1,

The “Tax Cuts and Jobs Act”

INCOME CHANGE IN FEDERAL

CATEGORY (2) TAXES (3) Present Law (5) Proposal (6)

Millions Percent Percent Percent Thousands

Less than $10,000................................... -$396 -5.6% 9.1% 8.6% 19,260

$10,000 to $20,000................................... -$1,792 (8) -0.7% -1.2% 20,566

$20,000 to $30,000................................... -$2,982 -13.5% 3.9% 3.4% 21,510

$30,000 to $40,000.................................. -$5,416 -11.5% 7.9% 7.0% 16,011

$40,000 to $50,000................................... -$6,728 -10.0% 10.9% 9.9% 12,841

$50,000 to $75,000................................... -$23,046 -8.7% 14.8% 13.5% 27,393

$75,000 to $100,000................................. -$22,437 -8.0% 17.0% 15.6% 17,835

$100,000 to $200,000............................... -$70,372 -7.5% 20.9% 19.4% 30,667

$200,000 to $500,000........................... -$65,485 -9.0% 26.4% 23.9% 9,152

$500,000 to $1,000,000............................. -$23,947 -9.4% 30.9% 27.8% 1,147

$1,000,000 and over................................. -$36,853 -5.9% 32.5% 30.2% 572

Total, All Taxpayers........................... -$259,454 -8.0% 20.7% 19.0% 176,955

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1-E.2, F., and I.2.-I.13. Under section H., the distribution analysis does not include the effect of the 

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), 

 excise taxes (attributed to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. 

 Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

 Does not include indirect effects.

(4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income described in footnote (2).

(5) This table replicates analysis from JCX-67-17 thus "present law" in this table is law in effect in 2017 before passage of the 2017 Tax Act.

(6) This table replicates analysis from JCX-67-17 thus "proposal" in this table is the Conference Agreement for H.R.1.

(7) Includes nonfilers, excludes dependent filers and returns with negative income.

(8) For returns in the $10,000 to $20,000 income category, Federal taxes would decrease from -$2.412 billion to -$4.204 billion.

NUMBER OF 

TAXPAYER 

UNITS (7)

Average Tax Rate (4)

 Calendar Year 2019
6

The Joint Committee staff also provides some information on the distribution of tax

changes within income category by grouping filing units into five categories, those with: tax 

decreases of greater than $500, tax decreases of $100-$500, tax changes of less than $100, tax 

increases of $100-$500, and tax increases greater than $500. This type of analysis provides 

information on horizontal equity to the extent that taxpayers in the same income categories are 

considered to be similarly situated.

Table 2 provides, for 2019, this analysis for the effect of the Conference Agreement for 

H.R.1. relative to 2017 prior law.

9

 The table shows that while the majority of tax filers are 

projected to have reductions in tax liability, some tax filers in each income category are projected 

to experience tax increases. The table also shows that generally as income increases, an 

increasing percentage of tax filers have tax decreases. However, filing units with economic 

income of $1 million or more have the highest percentage (13.8) with tax increases of greater 

than $500.

 9

 The Appendix contains versions of this table for later years. 
7

Table 2.─A Distribution of Returns by the Size of the Tax Change

for the Conference Agreement for H.R. 1,

The “Tax Cuts and Jobs Act”

INCOME Tax Change

CATEGORY (2) Greater Less than Greater

Than $500 $100-$500 $100 $100-$500 Than $500

Less than $10,000................................... 0.7% 3.5% 95.6% 0.1% 0.1%

$10,000 to $20,000................................... 5.6% 38.9% 52.4% 0.4% 2.7%

$20,000 to $30,000................................... 17.2% 30.5% 47.1% 1.0% 4.1%

$30,000 to $40,000................................... 30.1% 32.0% 32.4% 1.9% 3.7%

$40,000 to $50,000................................... 51.2% 21.7% 20.2% 2.8% 4.2%

$50,000 to $75,000................................... 67.7% 14.7% 10.2% 2.8% 4.6%

$75,000 to $100,000................................. 77.8% 10.4% 4.1% 3.0% 4.8%

$100,000 to $200,000............................... 87.0% 4.1% 1.7% 2.0% 5.1%

$200,000 to $500,000............................... 93.0% 1.8% 0.6% 0.9% 3.7%

$500,000 to $1,000,000............................. 93.5% 0.3% 0.1% 0.3% 5.9%

$1,000,000 and over................................. 85.3% 0.3% 0.2% 0.3% 13.8%

Total, All Taxpayers............................. 48.3% 17.2% 28.9% 1.7% 3.8%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1.-E.2., F., and I.2.-I.13. Under section H., the distributional analysis does not include the effect of the

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) The categories reflecting the size of tax change are indexed for inflation.

Tax Decrease Tax Increase

 Calendar Year 2019

Percentage of Returns
8

B. Distributional Analysis of Business Tax Provisions

The Joint Committee staff’s distributional analysis includes the effect of changes in 

business tax. This analysis depends on the extent to which the incidence of business taxes fall on 

owners versus workers, i.e., which parties bear the economic burden of business taxes. 

Following the standard view expressed in the economic literature, the Joint Committee staff 

assumes that none of the burden of corporate income taxes flows through to consumers (as a 

group distinct from owners and workers).

In the short run, the Joint Committee staff generally assumes that the burden from 

business tax falls entirely on capital owners, which includes both the owners of the business and 

the bond holders. None of the burden is assumed to be borne by labor in the short run. 

In the long run, capital is thought to be more mobile than labor. For example, owners 

may move capital overseas which shifts some of the burden of business tax to labor. As such, 

the Joint Committee staff follows the middle range of the current economic literature by 

assuming that 25 percent of corporate income taxes are borne by domestic labor and 75 percent 

are borne by owners of domestic capital. For passthrough entities, a smaller percentage of 

income comes from foreign sources, thus less of the taxes on business income of passthroughs is 

thought to fall on labor, relative to C corporations.10

Table 3 also replicates information from the Joint Committee on Taxation’s 

Distributional Effects of the Conference Agreement for H.R.1, the “Tax Cuts and Jobs Act,”

(JCX-68-17) for 2019. This table generally illustrates the split between provisions on the 

individual income tax and business income tax sides of the 2017 Tax Act. Note that the 

deduction for passthrough income11 is included with the individual income tax column in this 

table. Both the individual and business sides reduce tax liability in each income category. The 

average tax liability reduction increases with income on both the individual and business sides. 

The reduction in tax liability is more concentrated towards the upper end of the income 

distribution for the business side relative to the individual side with 60 percent of the benefit 

accruing to tax filers in the $200,000 and over income categories on the business side compared 

to 44 percent on the individual side, because higher income tax filers own more capital than tax 

filers with incomes less than $200,000.

The appendix contains a full replication of the tables provided in JCX-68-17. This 

analysis was conducted using data and macroeconomic baseline projections available at the time 

of the conference report for H.R.1 in 2017.12

 10 For a detailed discussion of all these issues related to the distribution of the tax burden on business 

income see Joint Committee on Taxation, Modeling the Distribution of Taxes on Business Income, (JCX-14-13), 

October 16, 2013.

11 Sec. 199A.

12 Congressional Budget Office, The Budget and Economic Outlook: 2017 to 2017, January 2017.
9

Table 3.─Distributional Effects of the Conference Agreement for H.R. 1,

The “Tax Cuts and Jobs Act”

Individual 

($ millions)

Business 

($ millions)

Less than $10,000................................... 19,260 -$127 -$269

$10,000 to $20,000................................... 20,566 -$1,206 -$586

$20,000 to $30,000................................... 21,510 -$2,279 -$703

$30,000 to $40,000............................. 16,011 -$4,469 -$947

$40,000 to $50,000................................... 12,841 -$5,533 -$1,195

$50,000 to $75,000............................. 27,393 -$18,887 -$4,158

$75,000 to $100,000................................. 17,835 -$17,279 -$5,158

$100,000 to $200,000............................... 30,667 -$51,409 -$18,964

$200,000 to $500,000............................... 9,152 -$47,008 -$18,476

$500,000 to $1,000,000............................. 1,147 -$16,031 -$7,916

$1,000,000 and over................................. 572 -$15,871 -$20,983

Total, All Taxpayers............................. 176,955 -$180,100 -$79,354

Source: Joint Committee on Taxation

Calendar Year 2019

Change in Federal taxes

Number of 

Taxpayer Units

INCOME CATEGORY (Thousands)
10

III. DISTRIBUTIONAL EFFECT OF COMPONENTS

OF THE 2017 TAX ACT

The aggregate distributional analysis produced by the Joint Committee staff shows that 

the 2017 Tax Act as a package provided tax liability reductions on average across all income 

categories. This package was comprised of many provisions, some of which generally reduced 

tax liability and some of which generally increased tax liability.

A. Tax Reductions

The 2017 Tax Act contains a number of provisions that, when considered in isolation, 

would reduce tax liability of individuals and businesses. Some of the major provisions that 

reduce tax liability are:

Modification of Rates.─To determine regular tax liability, an individual taxpayer 

generally must apply the tax rate schedules (or the tax tables) to his or her taxable income. The 

rate schedules are broken into several ranges of income, known as income brackets, and the 

marginal tax rate increases as a taxpayer’s income increases. Separate rate schedules apply 

based on an individual’s filing status. The 2017 Tax Act temporarily replaces the existing rate 

structure with a new rate structure that generally reduces tax rates.13

Increase in Standard Deduction.─An individual who does not elect to itemize deductions 

reduces his or her adjusted gross income (“AGI”) by the amount of the applicable standard 

deduction in arriving at his or her taxable income. The standard deduction is the sum of the 

basic standard deduction, which varies based on filing status, and, if applicable, the additional 

standard deduction for an individual who is elderly or blind. The amount of the standard 

deduction is indexed annually for inflation. The 2017 Tax Act temporarily increases the basic 

standard deduction. In 2019, the standard deduction is $24,400 for a joint return and a surviving 

spouse (increased from $12,700 in 2017), $18,350 for a head of household (increased from 

$9,350 in 2017), and $12,200 for other individuals (increased from $6,350 in 2017). 

Increase in and Modification of Child Tax Credit.─An individual is allowed a tax credit 

for each qualifying child. Generally, a qualifying child is any individual under the age of 17 who 

is the taxpayer’s son, daughter, stepson, stepdaughter, brother, sister, stepbrother, stepsister, or a 

descendant of any such individual. The child must share the same principal place of abode as the 

taxpayer for more than one-half of the taxable year, may not have provided over one-half of his 

or her own support for the taxable year, and may not file a joint return with a spouse. The 

aggregate amount of otherwise allowable child tax credits is phased out for an individual with 

income over a threshold amount. In some circumstances, all or a portion of the otherwise 

allowable credit is treated as a refundable credit (the “additional child tax credit”). A refundable 

credit creates an overpayment of income tax to the extent the credit exceeds the taxpayer’s 

income tax liability. The additional child tax credit is treated as refundable in an amount equal to 

15 percent of earned income in excess of a certain threshold. A taxpayer with three or more 

qualifying children may determine the additional child tax credit using the “alternative formula,” 

 13 The rate structures for 2017 and 2019 are presented in the Appendix.
11

under which the additional child tax credit equals the amount by which the taxpayer’s social 

security taxes exceed the taxpayer’s earned income credit.

The 2017 Tax Act temporarily increases the child tax credit to $2,000 per qualifying 

child (from $1,000 in 2017). The AGI threshold amount at which the credit begins to phase out 

is increased to $400,000 in the case of a joint return and $200,000 for all other taxpayers 

(increased from $110,000 for joint returns, $75,000 for single individuals or heads of 

households, and $55,000 for married individuals filing separate returns in 2017). The provision 

also lowers the earned income threshold for the additional child tax credit to $2,500 from $3,000 

in 2017 and increases the maximum amount of the additional child tax credit to $1,400, which is 

indexed for inflation up to $2,000.

The 2017 Tax Act temporarily provides a new $500 nonrefundable credit for each 

dependent other than a qualifying child.14 An individual may be claimed as a taxpayer’s 

dependent if the individual is a qualifying child or a qualifying relative of the taxpayer and meets 

certain other requirements. For this purpose, a qualifying child must be either under age 19 or a 

full-time student who is under age 24. An individual is a taxpayer’s qualifying relative if such 

individual (1) bears the appropriate relationship to the taxpayer; (2) has a gross income that does 

not exceed the personal exemption amount;15 (3) receives at least one-half of his or her support 

from the taxpayer; and (4) is not a qualifying child of the taxpayer.

Increase in Alternative Minimum Tax Exemption for Individuals.─An alternative 

minimum tax (“AMT”) is imposed on an individual in an amount by which the tentative 

minimum tax exceeds the regular income tax for the taxable year. The tentative minimum tax is 

the sum of (1) 26 percent of so much of the taxable excess as does not exceed a specified 

breakpoint and (2) 28 percent of the remaining taxable excess. The taxable excess is so much of 

the alternative minimum taxable income (“AMTI”) as exceeds the exemption amount. AMTI is 

the taxpayer’s taxable income increased by certain preference items and subject to certain other 

adjustments. The 2017 Tax Act temporarily increases the exemption amounts and the exemption 

amount phase out thresholds such that fewer taxpayers will be subject to the individual AMT.16

Increase in Estate and Gift Tax Exemption.─A gift tax is imposed on certain lifetime 

transfers, and an estate tax is imposed on certain transfers at death. Gifts and bequests generally 

are excluded from the recipient’s gross income. A unified credit is available with respect to 

taxable transfers by gift and at death. The unified credit offsets tax on a specified amount of 

 14 The 2017 Tax Act includes a temporary requirement that the taxpayer include the Social Security 

number (“SSN”) of the child on the tax return claiming the child tax credit (both the refundable and nonrefundable 

portions). Under prior law, the name and taxpayer identification number (“TIN”) of the qualifying child had to 

appear on the return. To claim the $500 nonrefundable other dependent credit, the taxpayer must include the 

individual’s TIN, not an SSN, on the tax return.

15 The applicable amount in 2019 is $4,200. See IRS Notice 2018-70, 2018-38 I.R.B. 441; Rev. Proc. 

2018-57, 2018-49 I.R.B. 827.

16 For example, under prior law the exemption amount was $84,500 and the phase-out threshold was 

$160,900 for married taxpayers filing a joint return in 2017. The 2017 Tax Act increases the exemption amount to 

$111,700 and the phase-out threshold to $1,020,600 for married taxpayers filing a joint return in 2019.
12

transfers, referred to as the applicable exclusion amount or exemption amount. The exemption 

amount was set at $5 million per individual for 2011 and is indexed for inflation for later years. 

Exemption used during life to offset taxable gifts reduces the amount of exemption that remains 

at death to offset the value of the decedent’s estate. The 2017 Tax Act temporarily doubles the 

estate and gift tax exemption for estates of decedents dying and gifts made after 2017. For 2019, 

the basic exclusion amount is $11,400,000 per individual, or $22,800,000 for a married couple, 

for determining the amount of the unified credit against estate tax. This amount is indexed for 

inflation. As noted earlier, estate and gift taxes as a general matter are not included in the 

distribution tables produced by Joint Committee staff.

21-Percent Corporate Tax Rate.─Corporate taxable income previously was subject to tax 

under a four-step graduated rate structure that ranged from 15 percent to 35 percent. Certain

personal service corporations paid tax on their entire taxable income at the rate of 35 percent. 

The 2017 Tax Act changes the corporate tax rate to 21 percent, eliminating the graduated 

corporate rate structure and the special rate for personal service corporations.

Deduction for Qualified Business Income.─The 2017 Tax Act temporarily allows an 

individual taxpayer to deduct 20 percent of qualified business income from a partnership, S 

corporation, or sole proprietorship, as well as 20 percent of aggregate qualified real estate 

investment trust dividends and qualified publicly traded partnership income. A specified 

agricultural or horticulture cooperative generally may deduct nine percent of qualified 

production activities income. A limitation based on W-2 wages, or W-2 wages and capital 

investment (as applicable), phases in above a threshold amount of taxable income, which in 2019 

is $160,700 for single individuals and heads of households, $160,725 for married individuals 

filing a separate return, and $321,400 for joint returns. A disallowance of the deduction on 

income of specified service trades or businesses also phases in above the same threshold amount 

of taxable income.

Temporary 100-Percent Expensing for Certain Business Assets.─A taxpayer generally 

must capitalize the cost of property used in a trade or business or held for the production of 

income and recover such cost over time through annual deductions for depreciation or 

amortization. The period for deprecation or amortization generally begins when the asset is 

placed in service by the taxpayer. Tangible property generally is depreciated under the modified 

accelerate cost recovery system, which determines depreciation for different types of property 

based on an assigned applicable depreciation method, recovery period, and convention. Under 

prior law, an additional first-year depreciation deduction was allowed equal to 50 percent of the 

adjusted basis of qualified property acquired and placed in service before 2020, and the 50 

percent allowance was phased down for property placed in service after 2017. The 2017 Tax Act 

extended and modified the additional first-year depreciation deduction through 2026 and 

increased the 50-percent allowance to 100 percent for property acquired and placed in service 

after September 27, 2017, and before January 1, 2023.17 The definition of qualified property was 

expanded to include certain qualified property for which the original use did not commence with 

 17 In general, the 100-percent allowance is phased down by 20 percent per calendar year for qualified 

property placed in service after December 31, 2022.
13

the taxpayer (so the provision applies to purchases of used as well as new items) and certain 

qualified film, television, and live theatrical productions.

Modifications of Rules for Expensing Depreciable Business Assets for Small 

Businesses.─Under prior law, certain taxpayers could elect to deduct (or “expense”) the cost of 

qualifying property, rather than to recover such costs through depreciation deductions, subject to 

limitation. The maximum amount a taxpayer could expense was $500,000 of the cost of 

qualifying property placed in service for the taxable year, reduced (but not below zero) by the 

amount by which the cost of qualifying property placed in service during the taxable year 

exceeded $2,000,000. In general, qualifying property is defined as depreciable tangible personal 

property that is purchased for use in the active conduct of a trade or business. The 2017 Tax Act 

increased the maximum amount a taxpayer may expense to $1,000,000, and increased the phase 

out threshold amount to $2,500,000. These amounts are indexed for inflation (for 2019, these 

amounts are $1,020,000 and $2,550,000, respectively). The 2017 Tax Act also expanded the 

definition of qualified real property eligible for expensing.

Small Business Accounting Method Reform and Simplification.─The Code generally 

allows a taxpayer to select the method of accounting to be used to compute taxable income, 

provided that such method clearly reflects the income of the taxpayer. Permissible methods of 

accounting include the cash receipts and disbursements method (“cash method”), an accrual 

method, or any other method (including a hybrid method) permitted under regulations prescribed 

by the Secretary. The cash method is administratively easy and provides the taxpayer flexibility 

in the timing of income recognition. Under prior law, a C corporation, a partnership that has a C 

corporation as a partner, or a tax-exempt trust or corporation with unrelated business income 

generally could not use the cash method, subject to certain exceptions. The 2017 Tax Act 

expanded the universe of taxpayers that may use the cash method of accounting to taxpayers 

(other than tax shelters) for whom the average annual gross receipts for the three-taxable-year 

period ending with the prior taxable year does not exceed a threshold amount, indexed for 

inflation. The threshold amount for a taxable year beginning in 2019 is $26,000,000. In 

addition, the 2017 Tax Act exempts taxpayers that meet the gross receipts test from certain 

accounting rules for inventories, cost capitalization, and long-term contracts.
14

B. Tax Increases

The 2017 Tax Act also contains a number of provisions that, when considered in 

isolation, would increase tax liability of individuals and businesses. Some of the major 

provisions that increase tax liability are:

Inflation Adjustment Based on Chained CPI.─Many dollar amounts in the Code, 

including the regular income tax brackets as well as certain amounts of deductions, credits, and 

exclusions, are adjusted for inflation. Under prior law, most of the adjustments were based on 

annual changes in the level of the Consumer Price Index for All Urban Consumers (‘‘CPI–U’’). 

The 2017 Tax Act requires the use of the Chained Consumer Price Index for All Urban 

Consumers (‘‘C–CPI–U’’) to adjust amounts currently indexed by the CPI–U. The C-CPI-U 

grows more slowly than the CPI-U, thus resulting in dollar amounts throughout the Code 

increasing at a slower rate. For example, the use of C-CPI-U results in taxpayers over time 

moving into higher income tax rate brackets more quickly than under prior law.

Suspension of Deductions for Personal Exemptions.─An individual taxpayer may claim a 

personal exemption for the taxpayer (both taxpayers in the case of a joint return) and any 

dependents of the taxpayer. In 2017, the personal exemption was $4,050. The 2017 Tax Act

temporarily suspends the personal exemption by setting the amount deductible for each personal 

exemption to zero.18

Modification of Certain Itemized Deduction Provisions.─An individual taxpayer who 

does not claim the applicable standard deduction may claim itemized deductions. The 2017 Tax 

Act temporarily modifies a number of itemized deductions, including (1) limiting the deduction 

for interest paid or accrued on acquisition indebtedness with respect to a qualified residence, (2) 

suspending the deduction for interest paid or accrued on home equity indebtedness with respect 

to a qualified residence, and (3) limiting the types of personal casualty losses that qualify for a 

deduction. In addition, the 2017 Tax Act limits the deduction for State and local taxes and 

suspends the miscellaneous itemized deduction limitation; these changes are explained in more 

detail below. 

Limitation of Deduction for State and Local taxes.─An individual taxpayer may claim an 

itemized deduction for certain taxes paid or accrued, whether or not incurred in a taxpayer’s 

trade or business or activity for the production of income. These taxes are: (i) State and local, 

and foreign, real property taxes; (ii) State and local personal property taxes; and (iii) State and 

local, and foreign, income, war profits, and excess profits taxes. The 2017 Tax Act temporarily 

limits the aggregate amount of the deduction to $10,000 ($5,000 for a married taxpayer filing a 

separate return) in the case of: (i) State and local real property taxes; (ii) State and local personal 

property taxes (to the extent not paid or accrued in carrying on a trade or business or an activity 

 18 For 2019, under prior law a personal exemption is $4,200.
15

described in section 212); and (iii) State and local income, war profits, and excess profits taxes.19 

It also suspends the deduction for foreign real property taxes.

Suspension of Miscellaneous Itemized Deductions.─An individual may claim certain 

expenses (“miscellaneous itemized deductions”) only if, in the aggregate, such expenses exceed 

two percent of the taxpayer’s adjusted gross income. Examples of miscellaneous itemized 

deductions include unreimbursed employee expenses (such as uniforms, union dues and the 

deduction for business-related meals, and travel), deductions for tax preparation fees, and 

investment expenses (such as investment management fees, safe deposit box fees and investment 

expenses from pass-through entities). The 2017 Tax Act temporarily suspends miscellaneous 

itemized deductions.

Limitation on Deduction for Business Interest.─Interest is generally deducted by a 

taxpayer as it is paid or accrued, depending on the taxpayer’s method of accounting. An 

individual taxpayer generally may not deduct personal interest. An individual taxpayer may 

deduct investment interest only to the extent of the taxpayer’s net investment income for the 

taxable year. The 2017 Tax Act limits the deduction for business interest. The deduction for any 

taxable year is limited to the sum of (1) business interest income of the taxpayer for the taxable 

year, (2) 30 percent of the adjusted taxable income of the taxpayer for the taxable year (not less 

than zero), and (3) the floor plan financing interest of the taxpayer for the taxable year. This 

limitation is applicable to all taxpayers but an exception applies to taxpayers (other than tax 

shelters) for whom the average annual gross receipts for the three-taxable-year period ending 

with the prior taxable year does not exceed a threshold amount, indexed for inflation. The 

threshold amount for a taxable year beginning in 2019 is $26 million. 

Modification of Net Operating Loss Deduction.─A net operating loss (‘‘NOL’’) 

generally means the amount by which a taxpayer’s business deductions exceed its gross income. 

In general, under prior law, an NOL could be carried back two taxable years and carried over 20 

taxable years, in order to offset taxable income in such years (referred to as the ‘‘NOL 

deduction’’). The 2017 Tax Act limits the NOL deduction to 80 percent of taxable income 

(determined without regard to the NOL deduction) and repeals the two-year carryback. 

Carryovers of such NOLs to other years are adjusted to take account of the 80% limitation, and 

may be carried over indefinitely. NOLs arising in taxable years beginning before January 1, 

2018, remain subject to prior law. Special rules apply to farming losses and certain insurance 

companies.

 19 An individual taxpayer may elect to claim an itemized deduction for State and local general sales taxes 

in lieu of the itemized deduction for State and local income taxes. This deduction is also subject to the temporary 

$10,000 aggregate limit.
16

Limitation on Losses for Taxpayers Other Than Corporations.─The 2017 Tax Act 

temporarily disallows excess business losses of taxpayers other than corporations. The 

disallowed excess business loss is treated as an NOL for the taxable year for purposes of 

determining any NOL carryover to subsequent taxable years. An excess business loss for the 

taxable year is the excess of aggregate deductions of the taxpayer attributable to trades or 

businesses of the taxpayer (determined without regard to the limitation of the provision), over the 

sum of aggregate gross income or gain attributable to trades or businesses of the taxpayer plus a 

threshold amount, which is indexed for inflation. The threshold amount for a taxable year 

beginning in 2019 is $255,000 ($510,000 in the case of a joint return).
17

C. Interactions of Select Individual Provisions

To illustrate how interactions between related provisions affect the overall distribution,

the following tables provide separate and combined distribution analysis for 2019 for seven 

provisions of the 2017 Tax Act related to individual income tax: (1) the change in the rate 

structure, (2) the modifications to individual AMT, (3) the suspension of deductions for personal 

exemptions, (4) the increase in the standard deduction, (5) the modifications to itemized 

deductions, (6) the modifications to the child tax credit, and (7) the change in inflation 

adjustment. Note that of these provisions, only the change in inflation adjustment is 

permanent.

20

For each of the selected seven provisions in Table 4 the distributional effects of reverting 

to prior law are shown by the number of returns affected and the change in tax liability in each

income category. The columns for each provision illustrate the distributional effect of changing 

that provision in isolation; i.e., holding all other aspects of present law constant. Thus the 

“Rates” columns illustrate the distributional effect of moving from the present-law rate structure 

back to the rate structure in effect just prior to the 2017 Tax Act21 (“prior law”), while keeping 

the standard deduction, personal exemptions, child tax credit, etc. as under present law. Thus, if 

no other change were made than to return to the prior law individual tax rate structure, 

approximately 93 million tax filing units would experience an aggregate increase in tax liability 

of approximately $198 billion in 2019.

Note that the sum of the total dollars of each of the seven provisions in isolation would 

not add to the total dollars of combined effect of these seven provisions presented. This is due to 

the interaction of the provisions. For example, reverting to the prior-law personal exemptions22

in isolation would result in the distributional effect shown in the “personal exemptions” columns 

in Table 4. These columns show that if no other change were made than to return to the priorlaw personal exemption amount, approximately 106 million tax filing units would experience an 

aggregate decrease in tax liability of approximately $127 billion in 2019. However, the 

distribution table showing reversion to the prior-law personal exemption amount would show 

larger decreases in liability if rates were reverted back to prior law before to making the change 

to the personal exemptions. Prior-law rates are higher so an increase in the deduction for 

personal exemptions decreases tax liability by more under prior-law rates relative to present-law 

rates. In other words, the deduction is more valuable when rates are higher.

 20 The other individual provisions in this table revert to prior law in 2026.

21 These rate brackets are adjusted for inflation as would occur under present law in order to produce prior 

law rate brackets applicable for 2019. That is, in this analysis inflation adjustments for the bracket breakpoints, 

standard deduction, etc., incorporate the C-CPI-U.

22 For 2019, under prior law a personal exemption is $4,200.
18

Table 4.─Selected Individual Tax Provisions

INCOME CATEGORY

Returns 

(Thousands)

Dollars 

(Millions)

Returns 

(Thousands)

Dollars 

(Millions)

Returns 

(Thousands)

Dollars 

(Millions)

Returns 

(Thousands)

Dollars 

(Millions)

Returns 

(Thousands)

Dollars 

(Millions)

Returns 

(Thousands)

Dollars 

(Millions)

Returns 

(Thousands)

Dollars 

(Millions)

Less than $10,000................................... (1) (2) (1) $1 (1) -$1 1,455 $182 (1) (2) 1,162 $82 851 -$4

$10,000 to $20,000................................... (1) (2) (1) $4 3,618 -$932 7,683 $3,313 (1) -$4 5,024 $1,005 8,674 -$132

$20,000 to $30,000................................... 3,122 $250 (1) (2) 6,895 -$2,804 10,467 $5,905 146 -$60 5,095 $2,435 10,879 -$254

$30,000 to $40,000............................. 6,296 $1,327 (1) $2 7,973 -$3,805 11,150 $7,010 277 -$153 4,209 $3,521 10,418 -$246

$40,000 to $50,000................................... 7,030 $2,706 (1) $6 8,908 -$4,896 11,077 $7,656 392 -$231 3,736 $4,285 10,237 -$232

$50,000 to $75,000............................. 19,382 $12,325 (1) $9 21,449 -$16,456 22,221 $20,381 1,519 -$1,113 7,353 $9,796 22,396 -$458

$75,000 to $100,000................................. 14,516 $14,748 (1) $9 15,932 -$17,742 14,649 $16,759 1,666 -$1,724 5,226 $7,703 15,949 -$323

$100,000 to $200,000............................... 30,433 $61,148 543 $688 30,705 -$54,576 24,509 $37,162 6,917 -$9,091 12,331 $23,943 30,650 -$1,025

$200,000 to $500,000............................... 10,140 $57,803 5,379 $23,773 10,005 -$25,843 5,700 $9,620 6,767 -$21,498 4,784 $13,543 10,220 -$664

$500,000 to $1,000,000............................. 1,293 $18,571 1,028 $13,213 (1) -$39 455 $1,131 1,189 -$12,335 60 $93 1,334 -$259

$1,000,000 and above.............................. 610 $29,540 70 $873 (1) -$1 156 $425 592 -$30,014 (1) (2) 682 -$146

TOTAL 92,824 $198,417 7,034 $38,578 105,532 -$127,094 109,522 $109,544 19,496 -$76,222 48,981 $66,404 122,289 -$3,743

Source: Joint Committee on Taxation

(1) Less than 50,000.

(2) Between -$500,000 and $500,000.

Child Tax Credit Chained-CPI

Calendar Year 2019

Rates AMT Personal Exemptions Standard Deduction Itemized Deductions
19

Table 5 combines the changes to the rate structure and AMT. For 2019, reverting to the 

prior-law version of these provisions would increase tax liability on average for all filers, with 

approximately 98 percent of filers affected with $100,000 or more in economic income. The 

changes in rate structure and AMT only affect around 39 percent of filers in economic income 

categories below $100,000.

Table 5.─Rates and AMT

Table 6 combines changes to the standard deduction, personal exemption, child tax credit 

and itemized deductions. These provisions are combined here because of the complementary or 

offsetting nature of these provisions. For example, consider a family of four with $100,000 in 

economic income and two children under 17. Under prior law this filing unit would have 

qualified for four personal exemptions. Under present law those exemptions are reduced to zero 

but the standard deduction is almost twice as large and the child tax credit is increased. For 

2019, Table 6 shows that generally, reverting back to the prior-law version of these provisions 

would increase tax liability on average for filers with economic income under $100,000, and 

decrease tax liability on average for filers with economic income of $100,000 or more. 

This change in vertical equity results from the disparate effect of these provisions across 

economic income category. For example, a family with economic income of $200,000 or above

might chose to itemize deductions in lieu of taking the standard deduction under both prior law 

and present law. Compared to present law, with a change back to prior law this family would 

gain personal exemptions and increases in itemized deductions, potentially lose child tax credits

Returns Dollars

INCOME CATEGORY (Thousands) (Millions)

Less than $10,000................................... (1) $1

$10,000 to $20,000................................... (1) $4

$20,000 to $30,000................................... 3,122 $250

$30,000 to $40,000............................. 6,296 $1,328

$40,000 to $50,000................................... 7,032 $2,712

$50,000 to $75,000............................. 19,384 $12,333

$75,000 to $100,000................................. 14,518 $14,752

$100,000 to $200,000............................... 30,449 $61,286

$200,000 to $500,000............................... 10,174 $60,008

$500,000 to $1,000,000............................. 1,326 $21,336

$1,000,000 and above.............................. 627 $29,986

TOTAL 92,932 $203,997

Source: Joint Committee on Taxation

(1) Less than 50,000.

Calendar Year 2019
20

(including any nonchild dependent credits), and not be affected by the reduction in the standard 

deduction. On net this could lead to a tax decrease for such a family if these provisions were 

changed back to their prior-law versions. 

Likewise, a family with economic income below $100,000 might take the standard 

deduction under both prior law and present law. Compared to present law, with a change back to 

prior law this family would gain personal exemptions, have a reduced standard deduction and 

potentially lose some amount of child tax credits (including any nonchild dependent credits), and 

not be affected by increases in itemized deductions. On net, this could lead to a tax increase for 

such a family if these provisions were changed back to their prior-law versions.

Table 6.─Standard Deduction, Personal Exemption,

Child Tax Credit, and Itemized Deductions

Table 7 presents the effect of changing the general inflation adjustment for provisions in 

the Code to use C-CPI-U. Several years are shown for this table, as the effect of this change 

compounds over time. Generally, the C-CPI-U grows more slowly than the CPI-U. In addition 

to moving taxpayers over time into higher income tax rate brackets more quickly than under 

prior law, indexed deduction and credit amounts will also grow more slowly over time.

As a further example illustrating how interactions of provisions can affect tax liability, 

consider the interaction between the inflation indexing change and the earned income tax credit 

(“EITC”). The EITC was not explicitly modified by the 2017 Tax Act, however the change to

inflation indexing will cause the credit amount of the EITC to grow at a slower rate over time, 

thus making the credit less generous relative to inflation indexing from prior law.

Returns Dollars

INCOME CATEGORY (Thousands) (Millions)

Less than $10,000.................................... 1,165 $81

$10,000 to $20,000................................... 9,603 $1,460

$20,000 to $30,000................................... 11,644 $2,636

$30,000 to $40,000.............................. 10,914 $3,095

$40,000 to $50,000................................... 10,579 $3,328

$50,000 to $75,000.............................. 22,842 $5,933

$75,000 to $100,000.................................. 16,262 $1,946

$100,000 to $200,000................................ 30,801 -$9,774

$200,000 to $500,000................................ 10,227 -$27,769

$500,000 to $1,000,000............................. 1,327 -$11,864

$1,000,000 and above............................... 656 -$29,794

TOTAL 126,020 -$60,721

Source: Joint Committee on Taxation

Calendar Year 2019
21

Table 7.─Chained-CPI

Returns Dollars Returns Dollars Returns Dollars

INCOME CATEGORY (Thousands) (Millions) (Thousands) (Millions) (Thousands) (Millions)

Less than $10,000................................... 851 -$4 1,118 -$20 1,354 -$43

$10,000 to $20,000................................... 8,674 -$132 9,882 -$501 11,077 -$996

$20,000 to $30,000................................... 10,879 -$254 11,441 -$885 12,600 -$1,745

$30,000 to $40,000............................. 10,418 -$246 10,658 -$835 11,047 -$1,594

$40,000 to $50,000................................... 10,237 -$232 10,924 -$787 11,563 -$1,535

$50,000 to $75,000............................. 22,396 -$458 24,083 -$1,880 25,630 -$4,132

$75,000 to $100,000................................. 15,949 -$323 17,602 -$1,458 18,891 -$3,352

$100,000 to $200,000............................... 30,650 -$1,025 33,812 -$4,994 35,983 -$11,144

$200,000 to $500,000............................... 10,220 -$664 11,205 -$3,514 12,024 -$9,460

$500,000 to $1,000,000............................. 1,334 -$259 1,473 -$1,309 1,510 -$1,876

$1,000,000 and above.............................. 682 -$146 724 -$766 744 -$1,257

TOTAL 122,289 -$3,743 132,923 -$16,949 142,424 -$37,134

Source: Joint Committee on Taxation

2019 2025 2029
22

The distribution tables of select individual provisions, such as Table 4 through 7 

discussed above, can assist with considerations of vertical equity by showing how tax filers 

across the income distribution are differentially affected by specific individual income tax 

provisions or groups of individual income tax provisions. However, these tables do not address 

horizontal equity in the same way that Table 2 does for the 2017 Tax Act in aggregate. 

The interactions of individual income tax provisions may also affect horizontal equity.

For example, consider two families with the same economic income that differ on other 

dimensions such as number and age of children, size of mortgage, State and local taxes paid, or 

the amount of charitable contributions. If one family chooses to itemize deductions and the other 

chooses the standard deduction, a change back to prior law may decrease the tax liability of one 

family because of more generous itemized deductions and increase the tax liability of the other 

by reducing the standard deduction. Similarly, changing personal exemptions and the child tax 

credit back to prior law may have different effects on families depending on the number children 

under 17. The child tax credit will be lower for children under 17, but for other dependents (e.g.,

children aged 17, college-aged children, older relatives), the loss of the $500 dependent credit 

may be more than offset by the return of the approximately $4,000 personal exemption, 

depending on the marginal tax rate of the family.

This analysis and discussion of the interactions of individual income tax provisions 

illustrate the some of the considerations that relate to the fairness of a tax policy system. As 

previously noted, modifications to any tax system always involve tradeoffs in the goals of having 

a tax system that is fair, is administrable, and minimizes distortions to economic efficiency. For 

example, Table 4 above reports the distributional effects from the 2017 Tax Act’s modification 

of the individual alternative minimum tax which shows a larger effect on tax filers with $100,000

or more in economic income. However, these modifications reduced the number of taxpayers 

required to compute and pay an alternative minimum tax liability. Many analysts note that such 

a change should reduce complexity for taxpayers and reduce administrative costs for the Internal 

Revenue Service. Policymakers must balance considerations of the fairness of a tax policy 

system with the other main considerations of how a tax policy system can be administrated and 

how a tax policy system affects economic efficiency.
23

IV. APPENDIX TABLES

Federal Individual Income Tax Rates for 2017

If taxable income is: Then income tax equals:

Single Individuals

Not over $9,325 10% of the taxable income

Over $9,325 but not over $37,950 $932.50 plus 15% of the excess over $9,325

Over $37,950 but not over $91,900 $5,226.25 plus 25% of the excess over $37,950

Over $91,900 but not over $191,650 $18,713.75 plus 28% of the excess over $91,900

Over $191,650 but not over $416,700 $46,643.75 plus 33% of the excess over $191,650

Over $416,700 but not over $418,400 $120,910.25 plus 35% of the excess over $416,700

Over $418,400 $121,505.25 plus 39.6% of the excess over $418,400

Heads of Households

Not over $13,350 10% of the taxable income

Over $13,350 but not over $50,800 $1,335 plus 15% of the excess over $13,350

Over $50,800 but not over $131,200 $6,952.50 plus 25% of the excess over $50,800

Over $131,200 but not over $212,500 $27,052.50 plus 28% of the excess over $131,200

Over $212,500 but not over $416,700 $49,816.50 plus 33% of the excess over $212,500

Over $416,700 but not over $444,550 $117,202.50 plus 35% of the excess over $416,700

Over $444,550 $126,950 plus 39.6% of the excess over $444,550

Married Individuals Filing Joint Returns and Surviving Spouses

Not over $18,650 10% of the taxable income

Over $18,650 but not over $75,900 $1,865 plus 15% of the excess over $18,650

Over $75,900 but not over $153,100 $10,452.50 plus 25% of the excess over $75,900

Over $153,100 but not over $233,350 $29,752.50 plus 28% of the excess over $153,100

Over $233,350 but not over $416,700 $52,222.50 plus 33% of the excess over $233,350

Over $416,700 but not over $470,700 $112,728 plus 35% of the excess over $416,700

Over $470,700 $131,628 plus 39.6% of the excess over $470,700
24

If taxable income is: Then income tax equals:

Married Individuals Filing Separate Returns

Not over $9,325 10% of the taxable income

Over $9,325 but not over $37,950 $932.50 plus 15% of the excess over $9,325

Over $37,950 but not over $76,550 $5,226.25 plus 25% of the excess over $37,950

Over $76,550 but not over $116,675 $14,876.25 plus 28% of the excess over $76,550

Over $116,675 but not over $208,350 $26,111.25 plus 33% of the excess over $116,675

Over $208,350 but not over $235,350 $56,364 plus 35% of the excess over $208,350

Over $235,350 $65,814 plus 39.6% of the excess over $235,350
25

Federal Individual Income Tax Rates for 2019

If taxable income is: Then income tax equals:

Single Individuals

Not over $9,700 10% of the taxable income

Over $9,700 but not over $39,475 $970 plus 12% of the excess over $9,700

Over $39,475 but not over $84,200 $4,543 plus 22% of the excess over $39,475

Over $84,200 but not over $160,725 $14,382.50 plus 24% of the excess over $84,200

Over $160,725 but not over $204,100 $32,748.50 plus 32% of the excess over $160,725

Over $204,100 but not over $510,300 $46,628.50 plus 35% of the excess over $204,100

Over $510,300 $153,798.50 plus 37% of the excess over $510,300

Heads of Households

Not over $13,850 10% of the taxable income

Over $13,850 but not over $52,850 $1,385 plus 12% of the excess over $13,850

Over $52,850 but not over $84,200 $6,065 plus 22% of the excess over $52,850

Over $84,200 but not over $160,700 $12,962 plus 24% of the excess over $84,200

Over $160,700 but not over $204,100 $31,322 plus 32% of the excess over $160,700

Over $204,100 but not over $510,300 $45,210 plus 35% of the excess over $204,100

Over $510,300 $152,380 plus 37% of the excess over $510,300

Married Individuals Filing Joint Returns and Surviving Spouses

Not over $19,400 10% of the taxable income

Over $19,400 but not over $78,950 $1,940 plus 12% of the excess over $19,400

Over $78,950 but not over $168,400 $9,086 plus 22% of the excess over $78,950

Over $168,400 but not over $321,450 $28,765 plus 24% of the excess over $168,400

Over $321,450 but not over $408,200 $65,497 plus 32% of the excess over $321,450

Over $408,200 but not over $612,350 $93,257 plus 35% of the excess over $408,200

Over $612,350 $164,709.50 plus 37% of the excess over $612,350
26

If taxable income is: Then income tax equals:

Married Individuals Filing Separate Returns

Not over $9,700 10% of the taxable income

Over $9,700 but not over $39,475 $970 plus 12% of the excess over $9,700

Over $39,475 but not over $84,200 $4,543 plus 22% of the excess over $39,475

Over $84,200 but not over $160,725 $14,382.50 plus 24% of the excess over $84,200

Over $160,725 but not over $204,100 $32,748.50 plus 32% of the excess over $160,725

Over $204,100 but not over $306,175 $46,628.50 plus 35% of the excess over $204,100

Over $306,175 $82,354.75 plus 37% of the excess over $306,175

Estates and Trusts

Not over $2,600 10% of the taxable income

Over $2,600 but not over $9,300 $260 plus 24% of the excess over $2,600

Over $9,300 but not over $12,750 $1,868 plus 35% of the excess over $9,300

Over $12,750 $3,075.50 plus 37% of the excess over $12,750
27

INCOME Tax Change

CATEGORY (2) Greater Less than Greater

Than $500 $100-$500 $100 $100-$500 Than $500

Less than $10,000........................... 0.4% 2.4% 96.8% 0.1% 0.2%

$10,000 to $20,000.......................... 5.8% 33.2% 55.1% 0.7% 5.1%

$20,000 to $30,000.......................... 14.6% 27.7% 49.0% 1.4% 7.2%

$30,000 to $40,000.......................... 25.2% 28.9% 36.4% 2.5% 7.0%

$40,000 to $50,000.......................... 45.6% 21.2% 22.5% 3.3% 7.4%

$50,000 to $75,000.......................... 61.7% 15.2% 12.3% 3.6% 7.2%

$75,000 to $100,000........................ 72.2% 12.2% 5.0% 3.9% 6.7%

$100,000 to $200,000....................... 82.4% 5.2% 2.1% 3.0% 7.3%

$200,000 to $500,000....................... 88.5% 2.5% 1.1% 1.8% 6.1%

$500,000 to $1,000,000.................... 90.5% 0.4% 0.3% 0.4% 8.4%

$1,000,000 and over........................ 80.1% 0.3% 0.2% 0.5% 18.8%

Total, All Taxpayers.................... 44.8% 16.2% 30.5% 2.3% 6.2%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1.-E.2., F., and I.2.-I.13. Under section H., the distributional analysis does not income the effect of the

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) The categories reflecting the size of tax change are indexed for inflation.

A DISTRIBUTION OF RETURNS BY THE SIZE OF THE TAX CHANGE FOR

THE CONFERENCE AGREEMENT FOR H.R.1,

THE "TAX CUTS AND JOBS ACT"

 Calendar Year 2021

Percentage of Returns

Tax Decrease Tax Increase
28

INCOME Tax Change

CATEGORY (2) Greater Less than Greater

Than $500 $100-$500 $100 $100-$500 Than $500

Less than $10,000........................... 0.2% 2.0% 96.9% 0.6% 0.3%

$10,000 to $20,000.......................... 5.1% 29.2% 56.4% 4.3% 5.0%

$20,000 to $30,000.......................... 13.1% 26.6% 50.6% 2.7% 7.0%

$30,000 to $40,000.......................... 19.8% 28.6% 40.3% 3.7% 7.5%

$40,000 to $50,000.......................... 39.9% 20.0% 27.2% 4.9% 8.0%

$50,000 to $75,000.......................... 54.8% 15.2% 15.7% 5.5% 8.8%

$75,000 to $100,000........................ 63.1% 14.6% 7.4% 5.3% 9.7%

$100,000 to $200,000....................... 73.6% 6.4% 3.1% 4.6% 12.3%

$200,000 to $500,000....................... 78.1% 3.6% 2.1% 2.8% 13.4%

$500,000 to $1,000,000.................... 83.0% 0.7% 0.4% 0.8% 15.2%

$1,000,000 and over........................ 65.8% 0.7% 0.7% 0.8% 32.0%

Total, All Taxpayers.................... 39.7% 16.0% 32.2% 4.0% 8.1%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1.-E.2., F., and I.2.-I.13. Under section H., the distributional analysis does not income the effect of the

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) The categories reflecting the size of tax change are indexed for inflation.

THE CONFERENCE AGREEMENT FOR H.R.1,

THE "TAX CUTS AND JOBS ACT"

 Calendar Year 2023

Percentage of Returns

Tax Decrease Tax Increase

A DISTRIBUTION OF RETURNS BY THE SIZE OF THE TAX CHANGE FOR
29

INCOME Tax Change

CATEGORY (2) Greater Less than Greater

Than $500 $100-$500 $100 $100-$500 Than $500

Less than $10,000........................... 0.3% 3.3% 95.6% 0.6% 0.3%

$10,000 to $20,000.......................... 6.1% 29.4% 55.2% 4.3% 4.9%

$20,000 to $30,000.......................... 13.8% 25.8% 50.0% 3.4% 7.0%

$30,000 to $40,000.......................... 19.7% 26.9% 41.8% 4.3% 7.4%

$40,000 to $50,000.......................... 38.9% 18.2% 29.0% 5.6% 8.3%

$50,000 to $75,000.......................... 53.0% 15.2% 16.2% 6.2% 9.5%

$75,000 to $100,000........................ 61.4% 14.5% 7.3% 6.0% 10.9%

$100,000 to $200,000....................... 70.7% 6.8% 3.1% 5.1% 14.4%

$200,000 to $500,000....................... 75.1% 3.8% 1.8% 3.3% 16.0%

$500,000 to $1,000,000.................... 80.2% 0.8% 0.6% 0.8% 17.6%

$1,000,000 and over........................ 63.3% 0.5% 0.3% 0.8% 35.0%

Total, All Taxpayers.................... 38.9% 15.8% 31.9% 4.4% 8.9%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1.-E.2., F., and I.2.-I.13. Under section H., the distributional analysis does not income the effect of the

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) The categories reflecting the size of tax change are indexed for inflation.

Tax Decrease Tax Increase

Percentage of Returns

A DISTRIBUTION OF RETURNS BY THE SIZE OF THE TAX CHANGE FOR

THE CONFERENCE AGREEMENT FOR H.R.1,

THE "TAX CUTS AND JOBS ACT"

 Calendar Year 2025
30

INCOME Tax Change

CATEGORY (2) Greater Less than Greater

Than $500 $100-$500 $100 $100-$500 Than $500

Less than $10,000........................... 0.3% 1.1% 96.6% 1.8% 0.2%

$10,000 to $20,000.......................... 1.9% 1.4% 72.9% 19.8% 3.9%

$20,000 to $30,000.......................... 3.4% 2.3% 72.0% 17.2% 5.1%

$30,000 to $40,000.......................... 4.9% 4.8% 69.4% 14.6% 6.3%

$40,000 to $50,000.......................... 6.2% 7.0% 65.6% 14.6% 6.6%

$50,000 to $75,000.......................... 6.0% 10.9% 61.5% 15.0% 6.6%

$75,000 to $100,000........................ 8.9% 17.8% 54.2% 13.5% 5.6%

$100,000 to $200,000....................... 16.2% 24.2% 34.1% 17.8% 7.7%

$200,000 to $500,000....................... 32.8% 18.1% 15.3% 17.6% 16.2%

$500,000 to $1,000,000.................... 54.7% 7.9% 4.5% 7.3% 25.6%

$1,000,000 and over........................ 58.2% 2.4% 1.1% 1.9% 36.4%

Total, All Taxpayers.................... 8.6% 10.4% 59.9% 14.8% 6.3%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1.-E.2., F., and I.2.-I.13. Under section H., the distributional analysis does not income the effect of the

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) The categories reflecting the size of tax change are indexed for inflation.

 Calendar Year 2027

Percentage of Returns

Tax Decrease Tax Increase

A DISTRIBUTION OF RETURNS BY THE SIZE OF THE TAX CHANGE FOR

THE CONFERENCE AGREEMENT FOR H.R.1,

THE "TAX CUTS AND JOBS ACT"
JOINT COMMITTEE ON TAXATION

December 18, 2017

JCX-68-17

Page 1

 Calendar Year 2019

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Average Tax Rate (4)

INCOME FEDERAL UNDER UNDER Present

CATEGORY (2) TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

 Less than $10,000.......... -$396 -5.6% $7.0 0.2% $6.6 0.2% 9.1% 8.6%

 $10,000 to $20,000........ -$1,792 (5) -$2.4 -0.1% -$4.2 -0.1% -0.7% -1.2%

 $20,000 to $30,000........ -$2,982 -13.5% $22.1 0.7% $19.1 0.6% 3.9% 3.4%

 $30,000 to $40,000........ -$5,416 -11.5% $47.0 1.5% $41.5 1.4% 7.9% 7.0%

 $40,000 to $50,000........ -$6,728 -10.0% $67.3 2.1% $60.6 2.0% 10.9% 9.9%

 $50,000 to $75,000........ -$23,046 -8.7% $265.3 8.2% $242.3 8.2% 14.8% 13.5%

 $75,000 to $100,000...... -$22,437 -8.0% $279.5 8.7% $257.1 8.7% 17.0% 15.6%

$100,000 to $200,000..... -$70,372 -7.5% $939.8 29.1% $869.4 29.3% 20.9% 19.4%

$200,000 to $500,000..... -$65,485 -9.0% $724.3 22.4% $658.8 22.2% 26.4% 23.9%

$500,000 to $1,000,000.. -$23,947 -9.4% $254.7 7.9% $230.8 7.8% 30.9% 27.8%

$1,000,000 and over........ -$36,853 -5.9% $624.1 19.3% $587.2 19.8% 32.5% 30.2%

Total, All Taxpayers....... -$259,454 -8.0% $3,228.7 100.0% $2,969.3 100.0% 20.7% 19.0%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

-----------------------------------------------------

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1-E.2, F., and I.2.-I.13. Under section H., the distribution analysis does not include the effect of the 

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), 

 excise taxes (attributed to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. 

 Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

 Does not include indirect effects.

(4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income described in footnote (2).

(5) For returns in the $10,000 to $20,000 income category, Federal taxes would decrease from -$2.412 billion to -$4.204 billion.

DISTRIBUTIONAL EFFECTS OF 

THE "TAX CUTS AND JOBS ACT"

THE CONFERENCE AGREEMENT FOR H.R.1,
JOINT COMMITTEE ON TAXATION

December 18, 2017

JCX-68-17

Page 2

 Calendar Year 2021

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Average Tax Rate (4)

INCOME FEDERAL UNDER UNDER Present

CATEGORY (2) TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

 Less than $10,000.......... -$60 -0.9% $6.9 0.2% $6.9 0.2% 8.2% 8.1%

 $10,000 to $20,000........ $1,920 (5) -$4.9 -0.1% -$3.0 -0.1% -1.4% -0.8%

 $20,000 to $30,000........ $1,948 8.6% $22.5 0.6% $24.5 0.7% 3.7% 4.0%

 $30,000 to $40,000........ -$1,956 -4.1% $47.7 1.4% $45.7 1.4% 7.6% 7.3%

 $40,000 to $50,000........ -$3,522 -4.8% $73.7 2.1% $70.1 2.1% 10.9% 10.4%

 $50,000 to $75,000........ -$18,819 -6.6% $283.4 8.1% $264.6 8.1% 14.7% 13.7%

 $75,000 to $100,000...... -$20,583 -6.9% $300.3 8.6% $279.8 8.5% 16.8% 15.6%

$100,000 to $200,000..... -$64,835 -6.4% $1,017.6 29.1% $952.7 29.1% 20.9% 19.6%

$200,000 to $500,000..... -$61,510 -7.7% $799.8 22.9% $738.3 22.5% 26.5% 24.4%

$500,000 to $1,000,000.. -$21,661 -7.8% $279.4 8.0% $257.8 7.9% 31.0% 28.4%

$1,000,000 and over........ -$29,845 -4.4% $671.8 19.2% $642.0 19.6% 32.4% 30.7%

Total, All Taxpayers....... -$218,927 -6.3% $3,498.3 100.0% $3,279.4 100.0% 20.7% 19.3%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

-----------------------------------------------------

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1-E.2, F., and I.2.-I.13. Under section H., the distribution analysis does not include the effect of the 

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), 

 excise taxes (attributed to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. 

 Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

 Does not include indirect effects.

(4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income described in footnote (2).

(5) For returns in the $10,000 to $20,000 income category, Federal taxes would increase from -$4.888 billion to -$2.969 billion.

DISTRIBUTIONAL EFFECTS OF 

THE CONFERENCE AGREEMENT FOR H.R.1,

THE "TAX CUTS AND JOBS ACT"
JOINT COMMITTEE ON TAXATION

December 18, 2017

JCX-68-17

Page 3

 Calendar Year 2023

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Average Tax Rate (4)

INCOME FEDERAL UNDER UNDER Present

CATEGORY (2) TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

 Less than $10,000.......... $278 4.3% $6.4 0.2% $6.7 0.2% 7.0% 7.3%

 $10,000 to $20,000........ $3,044 (5) -$5.0 -0.1% -$2.0 -0.1% -1.3% -0.5%

 $20,000 to $30,000........ $2,416 9.8% $24.7 0.7% $27.1 0.7% 3.7% 4.1%

 $30,000 to $40,000........ -$202 -0.4% $51.0 1.4% $50.8 1.4% 7.6% 7.6%

 $40,000 to $50,000........ -$2,127 -2.6% $80.9 2.1% $78.7 2.2% 10.8% 10.6%

 $50,000 to $75,000........ -$14,944 -4.9% $305.2 8.1% $290.2 8.0% 14.6% 13.9%

 $75,000 to $100,000...... -$16,558 -5.1% $325.9 8.6% $309.4 8.5% 16.6% 15.8%

$100,000 to $200,000..... -$49,535 -4.5% $1,103.4 29.3% $1,053.9 29.1% 20.8% 19.9%

$200,000 to $500,000..... -$46,640 -5.4% $863.6 22.9% $816.9 22.5% 26.5% 25.0%

$500,000 to $1,000,000.. -$14,015 -4.7% $297.6 7.9% $283.5 7.8% 30.8% 29.2%

$1,000,000 and over........ -$9,833 -1.4% $717.5 19.0% $707.7 19.5% 32.2% 31.5%

Total, All Taxpayers....... -$148,113 -3.9% $3,771.1 100.0% $3,623.0 100.0% 20.5% 19.7%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

-----------------------------------------------------

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1-E.2, F., and I.2.-I.13. Under section H., the distribution analysis does not include the effect of the 

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), 

 excise taxes (attributed to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. 

 Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

 Does not include indirect effects.

(4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income described in footnote (2).

(5) For returns in the $10,000 to $20,000 income category, Federal taxes would increase from -$5.044 billion to -$2.000 billion.

THE "TAX CUTS AND JOBS ACT"

DISTRIBUTIONAL EFFECTS OF 

THE CONFERENCE AGREEMENT FOR H.R.1,
JOINT COMMITTEE ON TAXATION

December 18, 2017

JCX-68-17

Page 4

 Calendar Year 2025

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Average Tax Rate (4)

INCOME FEDERAL UNDER UNDER Present

CATEGORY (2) TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

 Less than $10,000.......... $314 5.3% $5.9 0.1% $6.2 0.2% 5.8% 6.1%

 $10,000 to $20,000........ $2,847 (5) -$4.7 -0.1% -$1.8 0.0% -1.1% -0.4%

 $20,000 to $30,000........ $2,980 11.0% $27.2 0.7% $30.2 0.8% 3.8% 4.2%

 $30,000 to $40,000........ $105 0.2% $53.7 1.3% $53.8 1.4% 7.5% 7.5%

 $40,000 to $50,000........ -$1,701 -1.9% $88.0 2.2% $86.3 2.2% 10.9% 10.6%

 $50,000 to $75,000........ -$14,349 -4.4% $328.1 8.0% $313.8 8.0% 14.5% 13.9%

 $75,000 to $100,000...... -$16,652 -4.8% $350.6 8.6% $333.9 8.5% 16.5% 15.7%

$100,000 to $200,000..... -$48,439 -4.0% $1,197.4 29.3% $1,148.9 29.1% 20.7% 19.9%

$200,000 to $500,000..... -$47,460 -5.0% $943.3 23.1% $895.8 22.7% 26.5% 25.1%

$500,000 to $1,000,000.. -$13,623 -4.2% $321.5 7.9% $307.8 7.8% 30.8% 29.3%

$1,000,000 and over........ -$9,600 -1.2% $780.2 19.1% $770.6 19.5% 32.1% 31.5%

Total, All Taxpayers....... -$145,581 -3.6% $4,091.1 100.0% $3,945.5 100.0% 20.5% 19.7%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

-----------------------------------------------------

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1-E.2, F., and I.2.-I.13. Under section H., the distribution analysis does not include the effect of the 

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), 

 excise taxes (attributed to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. 

 Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

 Does not include indirect effects.

(4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income described in footnote (2).

(5) For returns in the $10,000 to $20,000 income category, Federal taxes would increase from -$4.664 billion to -$1.817 billion.

DISTRIBUTIONAL EFFECTS OF 

THE CONFERENCE AGREEMENT FOR H.R.1,

THE "TAX CUTS AND JOBS ACT"
JOINT COMMITTEE ON TAXATION

December 18, 2017

JCX-68-17

Page 5

 Calendar Year 2027

CHANGE IN FEDERAL TAXES (3) FEDERAL TAXES (3) Average Tax Rate (4)

INCOME FEDERAL UNDER UNDER Present

CATEGORY (2) TAXES (3) PRESENT LAW PROPOSAL Law Proposal

Millions Percent Billions Percent Billions Percent Percent Percent

 Less than $10,000.......... $383 7.3% $5.2 0.1% $5.6 0.1% 4.7% 5.1%

 $10,000 to $20,000........ $6,487 (5) -$3.4 -0.1% $3.1 0.1% -0.8% 0.7%

 $20,000 to $30,000........ $8,359 26.6% $31.4 0.7% $39.7 0.9% 4.1% 5.1%

 $30,000 to $40,000........ $4,864 8.2% $59.4 1.3% $64.3 1.4% 7.6% 8.3%

 $40,000 to $50,000........ $4,317 4.4% $98.0 2.2% $102.3 2.3% 11.0% 11.5%

 $50,000 to $75,000........ $4,060 1.2% $352.2 7.9% $356.3 8.0% 14.5% 14.6%

 $75,000 to $100,000...... -$1,037 -0.3% $380.3 8.6% $379.3 8.5% 16.3% 16.3%

$100,000 to $200,000..... -$5,993 -0.5% $1,302.4 29.3% $1,296.4 29.1% 20.7% 20.6%

$200,000 to $500,000..... -$5,890 -0.6% $1,026.5 23.1% $1,020.6 22.9% 26.6% 26.4%

$500,000 to $1,000,000.. -$3,099 -0.9% $345.7 7.8% $342.6 7.7% 30.8% 30.5%

$1,000,000 and over........ -$8,495 -1.0% $848.7 19.1% $840.2 18.9% 32.1% 31.7%

Total, All Taxpayers....... $3,958 0.1% $4,446.4 100.0% $4,450.3 100.0% 20.5% 20.5%

Source: Joint Committee on Taxation

Detail may not add to total due to rounding.

-----------------------------------------------------

(1) This table is a distributional analysis of the proposal in revenue table JCX-67-17, excluding the following sections: I. Tax Reform for 

 Individuals: D.4.-D.7., E.1-E.2, F., and I.2.-I.13. Under section H., the distribution analysis does not include the effect of the 

 cost-sharing reductions and change in Medicaid spending.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

(3) Federal taxes are equal to individual income tax (including the outlay portion of refundable credits), employment tax (attributed to employees), 

 excise taxes (attributed to consumers), and corporate income taxes. The estimates of Federal taxes are preliminary and subject to change. 

 Individuals who are dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.

 Does not include indirect effects.

(4) The average tax rate is equal to Federal taxes described in footnote (3) divided by income described in footnote (2).

(5) For returns in the $10,000 to $20,000 income category, Federal taxes would increase from -$3.415 billion to $3.072 billion.

THE CONFERENCE AGREEMENT FOR H.R.1,

THE "TAX CUTS AND JOBS ACT"

DISTRIBUTIONAL EFFECTS OF 
JOINT COMMITTEE ON TAXATION

December 18, 2017

JCX-68-17

Page 6

Distribution of Individual Income Tax Side of the Proposal

INCOME CATEGORY 2019 2021 2023 2025 2027

 Less than $10,000............. -$127 $88 $156 $169 $475

 $10,000 to $20,000............ -$1,206 $2,175 $2,645 $2,459 $6,744

 $20,000 to $30,000............ -$2,279 $2,392 $2,169 $2,693 $9,004

 $30,000 to $40,000............ -$4,469 -$1,335 -$438 -$194 $5,719

 $40,000 to $50,000............ -$5,533 -$2,656 -$2,341 -$2,015 $5,535

 $50,000 to $75,000............ -$18,887 -$15,831 -$15,493 -$15,245 $8,112

 $75,000 to $100,000........... -$17,279 -$16,973 -$17,140 -$17,630 $3,526

$100,000 to $200,000.......... -$51,409 -$51,510 -$51,494 -$51,832 $10,313

$200,000 to $500,000.......... -$47,008 -$48,721 -$49,435 -$51,435 $7,649

$500,000 to $1,000,000....... -$16,031 -$16,251 -$15,840 -$15,845 $1,542

$1,000,000 and over............ -$15,871 -$16,349 -$16,160 -$16,851 $907

Total, All Taxpayers.......... -$180,100 -$164,973 -$163,368 -$165,729 $59,526

Distribution of Business Tax Side of the Proposal

INCOME CATEGORY 2019 2021 2023 2025 2027

 Less than $10,000............. -$269 -$148 $121 $146 -$92

 $10,000 to $20,000............ -$586 -$256 $400 $388 -$257

 $20,000 to $30,000............ -$703 -$444 $247 $287 -$644

 $30,000 to $40,000............ -$947 -$621 $236 $299 -$855

 $40,000 to $50,000............ -$1,195 -$866 $214 $314 -$1,218

 $50,000 to $75,000............ -$4,158 -$2,989 $549 $895 -$4,052

 $75,000 to $100,000........... -$5,158 -$3,609 $582 $978 -$4,563

$100,000 to $200,000.......... -$18,964 -$13,325 $1,959 $3,394 -$16,306

$200,000 to $500,000.......... -$18,476 -$12,789 $2,795 $3,975 -$13,539

$500,000 to $1,000,000....... -$7,916 -$5,411 $1,825 $2,222 -$4,641

$1,000,000 and over............ -$20,983 -$13,496 $6,328 $7,251 -$9,401

Total, All Taxpayers.......... -$79,354 -$53,954 $15,255 $20,148 -$55,569

Distribution of the Proposal

INCOME CATEGORY 2019 2021 2023 2025 2027

 Less than $10,000............. -$396 -$60 $278 $314 $383

 $10,000 to $20,000............ -$1,792 $1,920 $3,044 $2,847 $6,487

 $20,000 to $30,000............ -$2,982 $1,948 $2,416 $2,980 $8,359

 $30,000 to $40,000............ -$5,416 -$1,956 -$202 $105 $4,864

 $40,000 to $50,000............ -$6,728 -$3,522 -$2,127 -$1,701 $4,317

 $50,000 to $75,000............ -$23,046 -$18,819 -$14,944 -$14,349 $4,060

 $75,000 to $100,000........... -$22,437 -$20,583 -$16,558 -$16,652 -$1,037

$100,000 to $200,000.......... -$70,372 -$64,835 -$49,535 -$48,439 -$5,993

$200,000 to $500,000.......... -$65,485 -$61,510 -$46,640 -$47,460 -$5,890

$500,000 to $1,000,000....... -$23,947 -$21,661 -$14,015 -$13,623 -$3,099

$1,000,000 and over............ -$36,853 -$29,845 -$9,833 -$9,600 -$8,495

Total, All Taxpayers.......... -$259,454 -$218,927 -$148,113 -$145,581 $3,958

Source: Joint Committee on Taxation

CHANGE IN FEDERAL TAXES ($ millions)

CHANGE IN FEDERAL TAXES ($ millions)

CHANGE IN FEDERAL TAXES ($ millions)

DISTRIBUTIONAL EFFECTS OF 

THE "TAX CUTS AND JOBS ACT"

THE CONFERENCE AGREEMENT FOR H.R. 1,
JOINT COMMITTEE ON TAXATION

December 18, 2017

JCX-68-17

Page 7

INCOME CATEGORY (2) 2019 2021 2023 2025 2027

 Less than $10,000............................. 19,260 19,286 19,053 19,034 18,985

 $10,000 to $20,000............................ 20,566 20,755 20,726 20,681 20,378

 $20,000 to $30,000............................ 21,510 21,700 21,965 22,183 22,499

 $30,000 to $40,000............................ 16,011 15,920 15,903 15,951 16,263

 $40,000 to $50,000........................... 12,841 13,239 13,707 14,004 14,365

 $50,000 to $75,000............................ 27,393 27,575 27,986 28,396 28,651

 $75,000 to $100,000.......................... 17,835 18,190 18,670 19,033 19,489

$100,000 to $200,000......................... 30,667 31,169 31,869 32,622 33,332

$200,000 to $500,000......................... 9,152 9,431 9,542 9,765 9,923

$500,000 to $1,000,000...................... 1,147 1,180 1,186 1,206 1,215

$1,000,000 and over........................... 572 584 594 611 629

Total, All Taxpayers.......................... 176,955 179,029 181,201 183,485 185,726

Source: Joint Committee on Taxation

(1) Includes nonfilers, excludes dependent filers and returns with negative income.

(2) The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, 

 [2] employer contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, 

 [5] nontaxable Social Security benefits, [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items,

 [8] individual share of business taxes, and [9] excluded income of U.S. citizens living abroad. Categories are measured at 2017 levels.

NUMBER OF TAXPAYER UNITS (thousands) (1)

NUMBER OF RETURNS BY INCOME CLASS