House Republicans’ long-awaited tax overhaul bill will keep the top individual rate at 39.6 percent for high-income earners and will immediately and permanently cut the corporate rate to 20 percent.
The legislation seeks to revamp the tax code in a major way for the first time since 1986, incorporating long-sought goals of congressional Republicans to keep more money in the pockets of individuals and families and boost incentives for businesses by closing loopholes.
The bill would collapse seven tax brackets for individuals to four brackets with rates of 12, 25, 35 and 39.6 percent.
The bill would also increase the standard deduction so single filers earning up to $12,000 and joint filers earning up to $24,000 would pay no income tax.
The measure includes an increase in the child tax credit from $1,000 to $1,600 per qualifying child. The child tax credit expansion is part of a new family credit that also includes a $300 credit for each parent and non-child dependent to help with everyday expenses.
The mortgage interest deduction is maintained in full for existing mortgages, but future homebuyers would only be able to deduct interest paid on the first $500,000 of the total cost of their mortgage.
Retirement incentives for 401(k)s and IRAs are also maintained.
And the estate tax, criticized by Republicans as a “death tax,” will be fully repealed under the plan, but not for six years. In the interim, the bill would double the estate tax exemption.
A provision that is expected to draw some opposition is the capping of a deduction for state and local property taxes at $10,000. The bill would eliminate the incentive that allows taxpayers to deduct state and local income or sales taxes.
House Ways and Means Chairman Kevin Brady has said he will consider feedback he receives as he looks to make additional changes in a chairman’s mark to be released in advance of the committee markup. The markup is scheduled to begin Monday and last for several days.
The initial round of feedback will come as Brady and GOP leaders brief the House Republican Conference on the plan Thursday morning. Feedback from interest groups and lobbyists will start flooding in soon after.
Brady and his fellow Ways and Means members and the House Republican leadership team are scheduled to meet Thursday afternoon with President Donald Trump at the White House.
House GOP leaders want to hold a vote on the measure before Thanksgiving.