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.