Eau Claire (WQOW) - President Trump's tax plan is the talk on Capitol Hill, and its implications are being analyzed across the nation, including in Eau Claire.
Thomas Kemp, an economic professor at UW-Eau Claire, said the overhaul would bring the biggest changes to your taxes since the Reagan administration.
The plan simplifies the tax code from seven income brackets to four, and if you're single and make less than $25,000, or married and make less than $50,000, you won't have to pay any income tax. However, Jon Peacock, director of the Wisconsin Budget Project, said hold off on the celebration.
"One of the problems is going to be, this plan has a $1.5 trillion dollar price tag," Peacock said. "It would increase the federal deficit by that much over the next ten years, and sooner or later we're going to have to offset that cost through broad tax increases or broad spending cuts."
Trump's administration said they would make up much of that deficit by closing loopholes. The only loophole they've mentioned is the deduction you can take for taxes paid to states and cities.
Meanwhile, Kemp said the plan is still too vague to make any assumptions.
"It is almost impossible at this point to determine exactly how any given household would be affected by this," Kemp said.
One deduction everyone is watching is the deductions you can take for mortgage interest on your home loan.
"Of course the significant middle class tax deduction is the mortgage interest deduction that many, many people here in Eau Claire take advantage of, and it significantly impacts their tax bill every year," Kemp said. "What we don't know at this point is whether that reduction is going to remain or be removed."
Not everyone is on board with the proposals, like the Wisconsin Budget Project, a group which advocates for low-income people. They said the richest 1 percent in Wisconsin would receive a tax cut 300 times greater than than the bottom 60 percent of taxpayers in the Dairy State.
"Over the last several decades, we've seen a growing divide between low and middle income people on one hand, and the very wealthy on the other hand," Peacock added. "This plan will really widen that divide."
Before anything is finalized, Congress would have to approve these changes.