The Tax Cuts and Jobs Act released by House Republicans earlier this month seeks to rewrite tax codes, and according to a White House press release from late September, the plan is “built for growth, supports middle-class families, defends our workers, protects our jobs, and puts America first.” Notable changes include a reduction in the number of income tax brackets, elimination of state and local tax deductions and an adjusted rate and cap on income from flow-through entities. The Senate draft of the bill, introduced Thursday, pushed back on implementing an immediate corporate tax cut and eliminated state and local deductions, two sticking points between the versions that could prove to be contentious.
TAX REFORM FOR INDIVIDUALS
The plan proposes reducing the number of marginal income tax brackets from seven to four.
The current lowest classes of 10 and 15 percent would be combined into a 12 percent bracket, which would include families earning anything from $0 to $90,000. Current rates stipulate that married couples filing jointly making between $0 and $19,050 pay 10 percent of their taxable income.
The Senate version retains the seven income brackets, keeping the lowest class at 10 percent but reducing the highest bracket to 38.5 percent.