So what’s in the massive $1.5 trillion Republican tax package, what’s not and what does it mean for most Americans?
The complex legislation, weeks in the making, scales back the popular deduction for state and local taxes, bad news for Americans in some of the wealthiest suburbs of New York, New Jersey and California. The bill preserves the deduction for medical expenses, rebuffing an effort by House Republicans to eliminate it.
The bill provides steep tax cuts for businesses and wealthy families, and more modest reductions for low- and middle-income families.
Here are things to know about the tax overhaul bill:
BUSINESS CUTS ARE PERMANENT, NOT SO FOR INDIVIDUALS AND FAMILIES
The legislation permanently slashes the tax rate for corporations from 35 percent to 21 percent. But the tax cuts for individuals and families are temporary, expiring in 2026.
THE DEFICIT WILL GROW
Despite Republican talk of fiscal discipline, the legislation is projected to add $1.46 trillion to the nation’s $20 trillion debt over a decade. GOP lawmakers say they expect a future Congress to continue the tax cuts so they won’t expire. If achieved, that would drive up deficits even further.
STATE AND LOCAL TAX DEDUCTION FOR SOME
The bill imposes a new $10,000 cap on the federal deduction that millions use in connection with state and local income, property and sales taxes. The deduction is especially vital to residents of high-tax states like New York, New Jersey and California.
Companies, on the other hand, will continue to be able to deduct their state and local tax payments as normal business expenses.
CHILD TAX CREDIT GOES UP
The current $1,000-per-child tax credit doubles to $2,000, with up to $1,400 available in IRS refunds for families who owe little or no taxes. Parents must provide children’s Social Security numbers to receive the child credit, a measure intended to deny the credit to people who are in the U.S. illegally.
RESTORED TAX BENEFITS
The final legislation restores some tax benefits that had been stripped in the House-passed bill, including the deduction for medical expenses not covered by insurance, the deduction for interest paid on student loans and the $7,500 tax credit for electric vehicles.
The legislation repeals an important part of the “Obamacare” health care law, the requirement that all Americans carry health insurance or face a tax penalty.