Republicans unveiled the final version of the Tax Cuts and Jobs Act early Friday evening, paving the way for their first major legislative win of the 115th Congress.
GOP lawmakers are expected to pass legislation providing the largest overhaul of the U.S. tax code in 31 years before the end of next week.
The $1.5 trillion tax package includes seven individual tax brackets falling at 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. The plan reduces rates for the majority of Americans and small businesses, with top income earners seeing their rate drop from 39.6 percent to 37 percent.
While GOP lawmakers aimed to make the cuts permanent, the individual rate deduction is slated to expire in 2025.
In addition to lowering individual rates, the bill doubles the standard deduction, allows for the deduction of state and local taxes up to $10,000, expands the child tax credit from $1,000 to $2,000 — which is fully deductible up to $1,400 for families making under $400,000 — and allows homeowners to deduct mortgage interest on their first and second homes up to $750,000.
Personal exemptions would be eliminated under the plan. The Alternative Minimum Tax would also remain in place for individuals, although repealed for corporation, but increases the exemption for individuals up to $500,000 and joint filers up to $1 million.
The Affordable Care Act’s individual mandate penalty would be eliminated in 2019 under the package and the estate tax exemption would be doubled.
Pass-through businesses would see their effective marginal rate capped at 29.6 percent. Business owners would be able to deduct 20 percent on the first $315,000 of joint income with safeguards being in place to prevent individuals abusing the lower rate for their wage income.
Corporations would see a drastic cut — with the rate dropping from 35 percent to 21 percent, slightly higher than Republicans’ initial goal of 20 percent — effective Jan 1. The reduction to the corporate rate, unlike the individual rates, would be permanent.
Multinational corporations who hold assets abroad would pay a one-time deemed repatriation tax on fixed assets and cash at 8 percent and 15.5 percent respectively.
The House is expected to bring the bill to the floor Tuesday with the Senate following on Tuesday and Wednesday after completing up to 10 hours of debate.