House GOP Tax Plan: Doubles Standard Deduction, Keeps Top Rate, No 401(k) Changes

From Fox News:

House Republicans on Thursday unveiled their long-awaited tax bill which preserves the popular 401K retirement account, lowers rates for many individual households but trims deductions for state and local taxes.

A summary of the plan, which was made available to reporters ahead of its public release, would also reduce the cap on the popular deduction to interest on mortgages to $500,000 for newly purchased homes. The current cap is $1 million.

The plan also limits the deductibility of local property taxes to $10,000 while eliminating the deduction for state income taxes. Republicans in high-tax states such as New York and New Jersey had come out strongly against it.

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“I view the elimination of the deduction as a geographic redistribution of wealth, picking winners and losers,” New York Republican Rep. Lee Zeldin said. “I don’t want my home state to be a loser, and that really shouldn’t come as any surprise.”

Called the Tax Cuts and Jobs Act, the GOP plan would also leave the top individual tax rate at 39.6 percent.

The child tax credit will rise to $1,600 from $1,000, though the $4,050 per child exemption would be repealed.

The legislation is the first major revamp of the U.S. tax code in three decades and has been a top legislative and political priority of Republicans.

“This is the beginning of the end of this horrible tax code in America,” Rep. Kevin Brady told Fox News.

The rollout was delayed a day as Republicans were still hammering out specifics.

Lawmakers had been at odds and scrambling to bridge deep divides over contribution limits to 401(k) retirement accounts and the possible elimination of a tax break for state and local taxes.

Potential changes to the plans created an uproar after rumors surfaced that Republicans were considering a plan to slash pretax donation limits from $18,000 for most people to as low as $2,400.

President Trump is expected to meet with House Republicans at the White House Thursday afternoon. Markups to the bill could come as early as Monday.

The House Ways and Means Committee plans to consider the bill next week.

Trump has recently said he’d like to see the bill become law by Christmas.

 

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