-Covault- Senior Technical Analyst-

The “Unified Framework for Fixing Our Broken Tax Code,” released by the Senate Finance Committee, reduces the number of tax rates to three, nearly doubles the standard deduction, and makes more people eligible for child- and adult-care tax credits.

It also eliminates most other deductions, including those for state and local income taxes, but keeps deductions for mortgage interest and charitable contributions. The plan also eliminates the alternative minimum tax, or AMT, and the estate tax.

Here’s a look at the major changes being proposed and how they could affect you.

Standard Deduction Nearly Doubles

The change: The standard deduction would be raised to $24,000 from $12,700 for married couples filing jointly. For single taxpayers and married couples filing separately, the standard deduction would rise to $12,000 from $6,350.

But the personal exemption, which is currently $4,050 per person, would now be included in the standard deduction, so the actual increase isn’t as big as it appears.

Who it affects:  Anyone whose total tax deductions (line 40 of your 2016 Form 1040) were less than $24,000 for a married couple or $12,000 for a single filer.

With the higher standard deduction, many people may no longer have to pay federal income taxes at all.

3 Tax Rates Instead of 7

Tax rates would be reduced to three—12 percent, 25 percent, and 35 percent—from the current seven. The lowest rate would rise to 12 percent from 10 percent, and the highest earners would see their maximum tax rate fall to 35 percent from the current 39.6 percent.

The proposal says a higher rate could still be reimposed.

Who it affects: Without releasing the tax brackets—the income level at which one tax rate ends and another begins—it’s impossible to know who will win and who will lose from this change.

But even with a higher, 12 percent tax rate, those paying that rate probably would end up paying less overall because of the higher standard deduction, Scott says.

Most Itemized Deductions Ended

The change: The GOP plan attempts to simplify the tax code by eliminating most itemized deductions except those for mortgage interest payments and charitable contributions.

Who it affects: Taxpayers who currently deduct state and local income, property, sales, and other types of tax could no longer do so on their federal tax returns.

Upper-middle-class residents in high-tax states like California, Massachusetts, New Jersey, and New York would be hit hardest. Of the 10 Congressional districts that claim the highest state and local tax deductions—also known as SALT deductions- eight are represented by Democrats.

For less wealthy residents of those states, however, the doubling of the standard deduction may offset the loss of the state and local tax deduction.

Child Tax Credit Expanded

The change: More taxpayers would be eligible for the child tax credit, which is currently at $1,000 per child. The plan gave no details on what the new income limits would be for the credit, however.

Still, some married couples would no longer be excluded from taking the credit because of their income. Currently single people with adjusted gross income of up to $75,000 can take advantage of the credit, but married couples with double that—$150,000—are disqualified because eligibility for them phases out at $110,000.

The plan also calls for a new, nonrefundable $500 tax credit for non-child dependents, to help cover the cost of caring for a dependent adult. No details were provided on who would be eligible.

Who it affects: More earners with dependent children and adults could benefit from this change. More upper-middle class married couples will be able to claim the tax credit as well.

AMT and Estate Tax Ended

The change: The proposal gets rid of the alternative minimum tax, an arcane tax initiated decades ago to penalize wealthy people claiming many deductions.

“The tax now affects many more Americans, including married households with taxable income of less than $85,000, and singles with income below $55,000.”

The federal estate tax, which the plan called the “death tax,” would be eliminated, as would a generation-skipping transfer tax.

Who it affects: People in higher-tax states—including many of those who would lose out from the loss of state and local tax deduction—would benefit most if the AMT were to go away.

Proponents of the estate tax repeal maintain that many small farms suffer from this tax, which charges as much as 40 percent on inherited property. But opponents say there are less than 200 family farms affected and that the biggest beneficiaries will be very wealthy families inheriting estates worth $5.45 million or more. The generation-skipping transfer tax, which generally relates to estates being passed to grandchildren, affects many of the same families.

Impact on Tax Filing

While the plan attempts to simplify the tax system, analysts say many taxpayers would still have to go through the same process when they prepare and file their taxes.

With the higher standard deduction, far more people would be able to determine easily through tax software or the IRS website whether they’re eligible to file a simple 1040, 1040A or 1040EZ, without having to gather documentation to claim deductions.