House Republicans released a bill on Thursday that would make major changes to the tax code. Some key elements of the proposal:
The bill would reduce the current marginal income tax brackets to four from seven — 12, 25, 35 and 39.6 percent — and lower taxes by increasing the income ranges affected by each rate.
The top rate would be the same as it is now, except the income level at which it would apply would increase to $1 million for married couples from $480,050 under the current law.
More than $480,050
More than $1 million
$424,950 to $480,050
$260,000 to $1 million
$237,950 to $424,950
$156,150 to $237,950
$77,400 to $156,150
$90,000 to $260,000
Income thresholds are for married couples filing jointly. | Sources: Internal Revenue Service; House Ways and Means Committee
While the lowest income rate would increase, typical families in the existing 10 percent bracket would most likely be better off because of a larger child tax credit and an increase in the standard deduction. The full effects of the plan on different groups has not yet been analyzed by experts.
The bill would repeal the individual Alternative Minimum Tax — which primarily affects households with incomes from $200,000 to $1 million — and would maintain preferential rates for investment income. It would also repeal the estate tax after six years, in the meantime doubling the amount of inherited wealth that is exempt from the tax to $11 million from $5.5 million.
The plan would nearly double the amount of the standard deduction and eliminate the personal exemption, a deduction based on the number of taxpayers and the dependents claimed on a return.
The new, single deduction would be higher for many filers, except those who claim multiple children. An increase in the child tax credit to $1,600 from $1,000 and a new $300 credit for each parent and nonchild dependent could make up the difference.
Filing status
Current deduction
Current deduction & exemptions
Deduction under G.O.P. bill
