House Republicans on Thursday unveiled the Tax Cuts and Jobs Act, new legislation that would cut corporate taxes and repeal taxes paid by large estates. Though the bill now has a long journey into becoming law, here are the highlights on the impact on individual taxes.
• There will be four tax rates: 12%, 25%, 35% and 39.6%. For single people, the brackets will be up to $45,000, up to $200,000, up to $500,000 and over $500,000, and for married people, those brackets will be up to $90,000, up to $260,000, up to $1 million and over $1 million.
The standard deduction would be hiked from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples. But there will be no personal exemptions.
• The child tax credit will be hiked to $1,600 from $1,000 per child, and there will be a credit of $300 for each parent to help with expenses.
• The mortgage interest deduction will be preserved for existing mortgages but capped at $500,000 for newly purchased homes.
• State and local income taxes will not be able to be deducted, but state and local property taxes will be, up to $10,000.
• Despite intense debate, there doesn’t appear to be any change to 401(k) and Individual Retirement Accounts.
• The alternative minimum tax is repealed.
• The estate tax exemption will be doubled from $5 million to $10 million and in six years, will be repealed.
• The deduction for interest on education loans and the deduction for qualified tuition and related expenses would be repealed.