House Republicans finally released their highly anticipated proposed tax plan Thursday. Here’s a rundown of everything you need to know.
Doubling The Standard Deduction
The new plan roughly doubles the standard income tax deduction from $6,350 to $12,000 for single filers. The deduction for married filers who are filing jointly also nearly doubles from $12,700 to $24,000. The child tax credit would increase from $1,000 to $1,600 under the new plan.
Changes To Brackets
The Republican plan reduces the total number of income tax brackets from seven (10, 15, 25, 28, 33, 35 and 39.6 percent) to only four:
- 12 percent (on the first $45,000 in income for individuals and $90,000 for couples)
- 25 percent (starting at $45,000 for individuals and $90,000 for couples)
- 35 percent (starting at $200,000 for individuals and $260,000 for couples)
- 39.6 percent (starting at $500,000 for individuals and $1 million for couples)
For perspective, based on changes to the brackets and deductions alone, the tax bill for a single filer earning $40,000 would decrease under the new plan by about $1,220, or 26.6 percent. The tax bill for a single filer earning $80,000 would drop by about $3,000, or 21.2 percent. The tax bill for a single filer earning $120,000 would drop by about $3,650, or 14.7 percent.
No Removal Of Individual Mandate
Under the new plan, Americans with no health insurance will still have to pay the fine often referred to as the individual mandate. In 2016, more than 8 million people paid fines of up to $2,085 per person for not having health insurance. President Donald Trump said on Wednesdaythat he wants to repeal the individual Obamacare mandate as part of the tax plan, but Congressional Republicans didn’t include eliminating the mandate as part of their bill.
No State And Local Tax Deductions
Despite the cuts, Americans would no longer be able to take advantage of state and local tax deductions under the new bill. This change could hit Americans living in states with the highest income tax rates the hardest, including residents of California, Oregon and Minnesota.
Lower Corporate Tax Rates
The new plan would lower…
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