Republicans pushed the most sweeping rewrite of the nation's tax laws in more than three decades through the House Tuesday. Due to a procedural error the House will again vote on the measure Wednesday -- where it's expected to again pass. So, how will the changes to the tax code affect the average American?
The table below compares current tax rates against the new tax bill.
Beyond that, where will most Texas see changes?
- The bill lowers individual tax rates to 0 percent, 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent; The top tax for individuals is lowered from 39.6 percent to 37 percent. The corporate tax rate is slashed from 35 percent to 21 percent.
- It doubles the standard deduction to $12,000 for an individual and $24,000 for a married couple -- meaning the first $12,000 or $24,000 is not taxed at all. Those who itemize, however, may lose some deductions.
- It doubles the Child Tax Credit from $1,000 to $2,000; the credit is fully refundable up to $1,400. Parents would have to provide children's Social Security numbers to receive the child credit, a measure intended to deny the credit to people who are in the U.S. illegally.
- It expands the medical expense deduction for medical expenses exceeding 7.5 percent of adjusted gross income, and rising to 10 percent in 2019.
- It removes the ACA penalty for not purchasing health care.
- It caps the property and sales tax deductions at $10,000.
The bill would initially provide tax cuts for Americans of all incomes. But if the tax cuts for individuals expire, most Americans — those making less than $75,000 — would see tax increases in 2027, according to congressional estimates.
CPA Jeff Beckley sat down with NBC 5 political reporter Julie Fine to discuss the tax bill and how some of the changes may impact Texans.
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Beckley added that there was no change to the capital gains tax.
Republicans, Democrats Still Debate Worthiness of Tax Plan
The massive $1.5 trillion package would touch every American taxpayer and every corner of the U.S. economy, providing steep tax cuts for businesses and the wealthy, and more modest tax cuts for middle- and low-income families. It would push the national debt ever higher.
"We're delivering a tax code that provides more jobs, fairer taxes and bigger paychecks to Americans across the country," said Rep. Kevin Brady of Texas, Republican chairman of the tax-writing Ways and Means Committee. "Our local job creators will see the lowest rates in modern history so they can invest more in their workers and in their future."
Democrats called the bill a giveaway to corporations and the wealthy, providing little if any tax help to the less-than-well-to-do and no likelihood that business owners will use their gains to hire more workers or raise wages.
And the Republicans' contention that the bill will make taxes so simple that millions can file "on a postcard" — an idea repeated often by the president — was simply mocked.
"What happened to the postcard? We're going to have to carry around a billboard for tax simplification," declared Rep. Richard Neal of Massachusetts, the top Democrat on the Ways and Means Committee.
Tax cuts for corporations would be permanent while the cuts for individuals would expire in 2026 in order to comply with Senate budget rules. The tax cuts would take effect in January. Workers would start to see changes in the amount of taxes withheld from their paychecks in February.
Despite GOP talk of spending discipline, it is projected to add $1.46 trillion to the nation's debt over a decade. GOP lawmakers say they expect a future Congress to continue the tax cuts so they won't expire. If achieved, that would drive up deficits even further.
Republicans acknowledged they still have to convince many Americans of the benefits of their bill. Many voters in surveys see the legislation as a boost to the wealthy, such as Trump and his family, and only a minor gain for the middle class.
