Tax Plan Passed By House Details

Understanding the Tax Plan Passed by the House

The House of Representatives recently passed a comprehensive tax plan that promises to reshape the U.S. tax code. Here's a breakdown of some of its key provisions:

Individual Taxes:

Increased Standard Deduction:

The standard deduction for individuals and married couples filing jointly will increase significantly, reducing the taxable income for many households. *

Lowered Tax Rates:

The number of tax brackets will be reduced from seven to four, with lower rates for most taxpayers. *

Increased Child Tax Credit:

The child tax credit will be doubled, providing families with up to $2,000 per eligible child.

Business Taxes:

Reduced Corporate Tax Rate:

The corporate tax rate will be slashed from 35% to 20%, making the U.S. more competitive internationally. *

Pass-Through Deduction:

Small businesses that are organized as pass-through entities, such as partnerships and LLCs, will receive a deduction of up to 20% of their qualified business income. *

Simplified Depreciation Rules:

Businesses will be able to deduct the entire cost of certain capital investments, such as equipment and buildings, in the first year they are acquired.

Other Provisions:

SALT Deduction Capped:

The deduction for state and local taxes (SALT) will be limited to $10,000. *

Mortgage Interest Deduction Changed:

The limit on mortgage interest deductions will be reduced to $750,000 for new mortgages and $500,000 for existing mortgages. *

Estate Tax Repealed:

The estate tax will be repealed for estates worth less than $11.18 million (adjusted annually for inflation).

Estimated Impact:

The Tax Foundation estimates that the plan will reduce federal tax revenue by $1.5 trillion over the next decade. It is also projected to boost economic growth by 1.7% and create 1.4 million new jobs.

Controversy:

The tax plan has been met with mixed reactions. Supporters argue that it will simplify the tax code, make businesses more competitive, and provide tax relief for middle-class families. Critics, however, contend that it will disproportionately benefit the wealthy, increase the federal deficit, and hurt low-income and middle-class Americans. The plan now moves to the Senate, where it will likely undergo revisions. The outcome of the tax reform process remains uncertain, but it is clear that the tax landscape in the United States is poised for significant change.