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Sugar-sweetened beverages are a major contributor to the US obesity and diabetes epidemics. Using the Coronary Heart Disease Policy Model, we examined the potential impact on health and health spending of a nationwide penny-per-ounce excise tax on these beverages. We found that the tax would reduce consumption of these beverages by 15 percent among adults ages 25–64. Over the period 2010–20, the tax was estimated to prevent 2.4 million diabetes person-years, 95,000 coronary heart events, 8,000 strokes, and 26,000 premature deaths, while avoiding more than $17 billion in medical costs. In addition to generating approximately $13 billion in annual tax revenue, a modest tax on sugar-sweetened beverages could reduce the adverse health and cost burdens of obesity, diabetes, and cardiovascular diseases.