The House Tax Cuts and Jobs Act: The Impacts on Jobs and Incomes by State

Update (11/15/2017): The Tax Foundation was recently made aware of a calculation error affecting estimates in this paper. The figures in this report have been corrected and are now accurate.

With yesterday’s release of the House Tax Cuts and Jobs Act, Americans are trying to understand how these tax changes would impact their families. The pro-growth tax plan would simplify the tax code by eliminating most itemized deductions, while reducing marginal tax rates.

Using the Tax Foundation’s Taxes and Growth (TAG) macroeconomic tax model, our analysis found that the “the plan would significantly lower marginal tax rates and the cost of capital, which would lead to 3.9 percent higher GDP over the long term [and] 3.1 percent higher wages.”

Indeed, the TAG model estimates that the plan would result in the creation of roughly 975,000 new full-time equivalent jobs, while increasing after-tax incomes by 4.4 percent in the long run. The increase in family incomes is the result of both the income tax cuts and the broader rise in productivity and wages due to economic growth. These estimates take into account all aspects of the House Tax Cuts and Jobs Act, including changes to the individual and corporate tax codes.

The table below illustrates the state-by-state impact of the plan for both new jobs and the boost to after-tax incomes for middle-income families.

Impact of the House Tax Cuts and Jobs Act on Jobs and After-Tax Incomes by State
Source: Tax Foundation, Taxes and Growth Model, November 2017 version.
Note: The results here use Census figures to illustrate the income gains for median households by state. These estimates will differ slightly from our previous estimates using aggregate IRS figures to illustrate the income gains for taxpayers at various income levels.
  Estimated FTE Jobs Added (10-Year Estimate) Estimated Gain in After-Tax Income for Middle-Income Family (10-Year Estimate)
United States Total 890,000 $2,243
Alabama 12,161 $1,794
Alaska 2,046 $2,877
Arizona 16,644 $2,170
Arkansas 7,556 $1,744
California 101,422 $2,532
Colorado 15,993 $2,682
Connecticut 10,335 $2,885
Delaware 2,787 $2,206
District of Columbia 4,815 $2,697
Florida 51,601 $1,945
Georgia 26,947 $2,034
Hawaii 3,986 $2,741
Idaho 4,285 $2,149
Illinois 37,010 $2,333
Indiana 18,975 $2,132
Iowa 9,666 $2,246
Kansas 8,678 $2,159
Kentucky 11,782 $1,724
Louisiana 12,134 $1,603
Maine 3,800 $1,933
Maryland 16,667 $2,803
Massachusetts 21,922 $2,746
Michigan 26,625 $2,169
Minnesota 17,823 $2,668
Mississippi 7,045 $1,562
Missouri 17,495 $2,091
Montana 2,879 $2,169
Nebraska 6,248 $2,256
Nevada 8,001 $2,106
New Hampshire 4,114 $2,898
New Jersey 25,086 $2,602
New Mexico 5,113 $1,841
New York 57,834 $2,335
North Carolina 26,713 $2,043
North Dakota 2,676 $2,287
Ohio 33,736 $2,051
Oklahoma 10,167 $1,936
Oregon 11,281 $2,247
Pennsylvania 36,215 $2,317
Rhode Island 3,016 $2,338
South Carolina 12,642 $2,065
South Dakota 2,663 $2,183
Tennessee 18,255 $1,951
Texas 74,037 $2,210
Utah 8,786 $2,564
Vermont 1,927 $2,312
Virginia 24,114 $2,525
Washington 19,968 $2,672
West Virginia 4,603 $1,685
Wisconsin 17,999 $2,273
Wyoming 1,728 $2,198

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