Chip Somodevilla/Getty Images(WASHINGTON) — Once President Trump signs the GOP tax plan just passed by Congress–millions of Americans will feel the impact.
The bill includes deep tax cuts for corporations, tax breaks for the wealthy, and what experts say are more limited benefits for middle-class Americans.
Here’s what’s in the bill:
— Corporate rate to 21%, down from 35% under current law. Takes effect in 2018.
— Eliminates Corporate Alternative Minimum Tax – Had been “rolled back” but not repealed in previous versions, according to Sen. John Cornyn.
— Pass-through deduction rate set at 20% for first $315,000 of joint income
FOR THE WEALTHY
— Top individual rate to 37%, down from 39.6% under current law.
— Individual Alternative Minimum Tax exemption increased to $500k for individuals, $1 million for couples filing jointly.
— Doubles the amount of the current exemption from the Estate Tax (currently $5.5 million)
FOR THE MIDDLE CLASS
— Standard deduction increased from $12,700 to $24,000 (had been previously reported as $24,400) for joint returns and from $6,350 to $12,000 for individuals. According to the Tax Policy Center, more than two-thirds of Americans take the standard deduction when filing taxes.
— Tax brackets: 7 brackets + a 0% rate 10%, 12%, 22%, 24%, 32%, 35%, 37%
For those who ITEMIZE instead of take the standard deduction
— State and local tax deduction capped at $10,000 combined from any/all categories (property/income/sales taxes). Current law caps property tax deduction at $1 million. There are no current caps on state/local income tax deduction.
— Mortgage interest deduction capped at $750k, down from $1 million under current law.
— Graduate school stipend deduction (tax-free tuition waivers) preserved.
— Student loan interest deduction preserved.
— Medical expense deduction is preserved. It allows Americans to deduct medical expenses not covered by insurance that exceed 10 percent of adjusted gross income.
— Child Tax Credit preserved. Expanded from $1,000 to $2,000 and refundable up to $1,400 – had previously been refundable up to $1,100 but Rubio got it raised
— Adoption tax credit is preserved
— Charitable giving tax deduction is preserved
— Repeal of individual mandate requiring health insurance. According to CBO, repealing Obamacare’s individual mandate insurance could lead to 13 million more Americans without health insurance, while saving the government $338 billion in federal health insurance subsidy payments over the next decade.
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