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Rep. Kevin Brady (R-TX), Chairman of the House Ways and Means Committee, holds a briefing for reporters on the Republican tax reform plan on Capitol Hill in Washington, U.S., November 2, 2017. REUTERS/Aaron P. Bernstein - RC185DA3DCC0

Here’s what the GOP tax reform plan would mean for families, businesses

Republicans rolled out a detailed tax reform bill Thursday after months of negotiations with the White House. The $1.5 trillion House plan would cut corporate taxes and simplify the tax code, a longtime Republican goal. The bill will likely change between now and the end of the year, when GOP lawmakers are planning to send a final version to President Donald Trump’s desk.

Still, one thing is clear: The tax reform plan will mean different things to different people, depending on how much they make, where they live, and their family size and makeup. Here’s a look at what the overhaul would mean for various groups of people:

  • Large families: The GOP plan would repeal most personal exemptions and increase the standardized deduction, changes that would “be a negative trade off for larger families,” according to Mark Mazur, an analyst at the Tax Policy Center. Since the standard deduction would go up to $12,000 for individuals — and up to $24,000 for married couples — and the personal exemption for each child is worth around $4,050, a family with a lot of children that currently claims numerous personal exemptions would be disadvantaged by the changes.
  • Families with children in college: The GOP plan takes away personal deductions for individuals and dependents, which means parents may lose exemptions for college students under the age of 24. The proposal would expand the existing child tax credit from $1,000 to $1,600, but this only applies to children under the age of 17.
  • Blue states: State and local tax deductions would be eliminated, which would disproportionately impact upper-middle class households in the left-leaning, high-tax states — like New York and California — that claim a majority of the “SALT” deductions. This provision is opposed by some House Republicans, and could be a major sticking point in crafting the final bill.
  • Homeowners: The plan would keep the mortgage interest deduction in place, but it would cap the deduction at $500,000 for newly purchased house.
  • Corporations: The plan would reduce the corporate income tax rate to 20 percent and repeal the corporate alternative minimum tax, ultimately lowering taxes on corporations and businesses.
  • Pass-through businesses: Pass-through businesses, such as partnerships and sole proprietorships, are currently taxed at a maximum rate of around 39.6 percent. Under the GOP plan, the maximum tax rate on income for such businesses would drop to 25 percent.
  • Low-income households: Low-income households in the bottom 20 percent would receive an average tax cut of around $100, according to Mazur of the Tax Policy Center. Taxpayers earning up to $24,000 would not pay income tax.
  • Middle-income households: Middle-income households would likely see an average benefit of a few hundred dollars a year. Married couples who file jointly would fall in the 12 percent tax bracket for income up to $90,000, and in the 25 percent tax bracket for income up to $260,000. The slightly lower tax rates, larger standard deduction and expanded child credit would help. But getting rid of personal exemptions, itemized deductions and using a slightly less favorable weight index for inflation would also hurt this group.
  • High-income households: People earning up to $1 million would fall in the 35 percent tax bracket. Earnings above $1 million would be taxed at 39.6 percent. By 2018, the top 1 percent would get an average tax cut of more than $100,000 a year. Overall, the top 1 percent would get about half of the tax cuts under the GOP plan, while middle-income households would get about 8 percent.

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