Republicans introduced the much-anticipated tax reform legislation on Nov. 2. If the bill passes both chambers, it will be the first major U.S. tax reform since 1986.
The House Ways and Means Committee introduced the Republican draft of the tax code rewrite. The markup process—the revision and amendment of the bill in committee—is expected to begin on Nov. 6.
According to a summary released, the legislation calls for slashing the corporate tax rate from 35 percent to 20 percent.
The plan, named the Tax Cuts and Jobs Act, leaves the top individual tax rate at 39.6 percent, which will be applied to married couples earning more than $1 million a year.
The new individual tax brackets would be:
12 percent: For incomes up to 45,000 for individuals and 90,000 for married couples
25 percent: For incomes up to 200,000 for individuals and 260,000 for married couples
35 percent: For incomes up to 500,000 for individuals and $1 million for married couples
The standard deduction would be $12,000 for individuals (up from $6,350) and $24,000 for married couples (up from $12,700).
The plan repeals the deduction for state and local income and sales taxes. But it will allow a deduction for state and local property taxes up to $10,000 for both married couples and individuals.
The bill expands the child tax credit to $1,600. Families get up to a $1,000 credit per child under current law.
In addition, there will be no cutback in tax incentives for 401(k) plans. However, the bill proposes changes to the mortgage interest deduction. Under the plan, existing homeowners can keep their mortgage interest deduction but future purchases will be capped at $500,000 (lower than the current cap of $1 million for couples).
The repatriation rate on offshore earnings of U.S. companies will be as high as 12 percent. Illiquid assets would be taxed gradually at a lower rate.
The House is likely to consider the bill the week of Nov. 13, said White House Press Secretary Sarah Sanders on Oct. 30.
“In order to stay on pace, we want to see a House bill passed by Thanksgiving. This is a very aggressive timeline, but one that will help us get tax cuts this year,” she said.