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Highlights from the GOP tax bill

Highlights from the GOP tax bill
© Greg Nash

The Republican proposal to overhaul the tax code finally emerged on Thursday after a one-day delay and on an ambitious timeline pushed by the GOP to pass it this year.

Here are some of the major changes proposed in the bill, which could be marked up in a House committee as early as Nov. 6.

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New rates

Individual tax brackets are consolidated from seven to four brackets, with rates of 12, 25, 35 and 39.6 percent.

The current seven brackets include rates ranging from 10 percent to 39.6 percent.

The new top rate applies to income above $500,000 for individuals and $1 million for couples. Currently, the top rates are in the range of $450,000.

What’s cut

The state and local tax income and sales deduction is eliminated.

The ceiling to deduct mortgage interest is lowered to $500,000, down from the current $1 million threshold.

Tax deductions for student loan interest are cut.

Tax breaks for medical expenses are repealed.

The estate tax is repealed over six years.

The personal exemption is cut, a disadvantage for larger families.

What stays or is expanded

The standard deduction will roughly double from $6,350 to $12,000 for individuals and $12,700 to $24,000 for couples.

Tax breaks for retirement income in 401(k) plans, which was among the items lawmakers mulled trimming, remain.

The current child tax credit is expanded from $1,000 per child to $1,600 per child.

A new family credit of $300 is added for each parent and nonchild dependent, though it sunsets after five years.

The property tax deduction is kept, but capped at $10,000.

Business

The corporate tax rate is slashed from 35 percent to 20 percent.

A new tax rate for so-called pass through businesses, those not incorporated, is set at a maximum of 25 percent for certain income. But much of the income would still be subject to the individual rates.

The bill as a default position would not allow income from personal services businesses, such as law and accounting firms, to be eligible for the 25-percent rate.

It shifts the United States to a so-called territorial tax system, where most foreign-earned profits are not taxed.

This post has been updated.