The tax cuts are estimated to cost $3.7 trillion, according to the Joint Taxation Commission. It supports the $4 trillion target set by Congressional Republicans.
On May 12, the House Way and the Means Committee announced the tax policy portion of the GOP Megaville to implement President Donald Trump’s sweeping agenda.
The committee dealing with taxes and other government revenue streams will meet on May 13th to mark up the bill at a meticulous hearing amid disagreement on aspects such as state and local tax deductions or salt.
The tax cut is estimated to cost $3.7 trillion, according to the Tax Commission. That’s below the $4 trillion target set by Congressional Republicans. This represents Trump’s signature domestic policy plan. He says he intends to work with his tariff policy to boost the US economy.
As it has been passed under a settlement, there is no need for democratic support to pass the bill. But even if House Speaker Mike Johnson (r-la.) has enough Republicans on board in a narrowly divided home that can spare three asylums, he can still challenge him.
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This is what lies within the laws of the Dramatic Methods and Means Committee.
Permanent tax reduction
The bill will forever codify the current income tax rates reduced since 2017 by the first major law enacted during Trump’s first period, the Tax Cuts and Employment Act (TCJA).
The TCJA has raised the standard deduction for individual taxpayers from $6,500 to $12,000, lowering many itemized deductions while lowering tax ranges for all income levels.
Trump has promised that “making tax cuts permanent” will be a core goal in his second term.
Tax cuts from the 2017 law are set to expire on December 31st this year. If that happens, the tax law will revert to pre-2017 rules. This is something Trump and Republicans are eager to avoid.
Increase in child tax credits has been extended
In its breakdown, Congress will be blocking out the popular double-times child tax credit for more than 40 million taxpayers, according to the House Ways and the Means Committee.
As part of the TCJA, the child tax credit has been increased from $1,000 per child who relies on to $2,000 per child.
This credit boost is one of the other provisions of the 2017 law, and if not extended, it will be sunset this year.
There are no tips, no overtime or taxes on car loan interest
The bill also fulfills Trump’s 2024 campaign promises and ends taxes on tips, overtime salaries and car loan interest.
The Methods and Instructions Committee evaluated the law as a savings for an average American family of $1,700 and increasing the actual annual take-away wage for a centrally-income household with two children, between about $4,000 and $5,000.
Individual workers reportedly have an increase in actual annual wages of between $2,100 and $3,300 per worker.
“MAGA Account”
The bill creates a “money account for Growth and Progress (MAGA) account” for tax-free savings. These accounts are essentially trustworthy to save money for children who can receive funds when parents turn 18.
Parents can create MAGA accounts at financial institutions aimed at minor children and donate up to $5,000 each year to their account. It is tax-free for a period of up to 31 years, at which point you will need to hand over control of your account to the child.
Both parents and children’s beneficiaries must have a Social Security Number (SSN) and lock illegal immigrants from the program.
State and Local Tax Credits (Salt)
The point of competition among Republicans is the state and local tax (salt) credits.
The salt deduction is currently at $10,000, but Republicans in Democrat-controlled states like New York and California want to increase it.
The text will raise it to $30,000, but a group of lawmakers said that it’s not enough. Rep. Mike Lawler (RN.Y.) hopes that the amount for a single filer will increase to $100,000 and $200,000 for those who submit jointly.
Meanwhile, conservatives have criticised salt, claiming that GOP-led states are demanding subsidies to high-tax Democrat states.
Eliminate energy tax credits
The text eliminates tax credits for alternative energy sources.
This includes elimination of tax credits surrounding clean energy vehicles, nuclear power and clean hydrogen.
These credits were created under the Inflation Reduction Act of 2022. This was one of the laws signed by former President Joe Biden.
Remove illegal immigrant taxpayer benefits
In line with the Trump administration’s hawkish stance on illegal immigration, the text consists of removing taxpayer benefits for people in the United States illegally.
These taxpayer benefits include Obamacare, Medicaid and Medicare.
Tax increases on donation revenues from several university
The bill will tax donations from certain universities and universities by up to 21%.
Similar to the 2017 tax law, the committee’s textbook has a 1.4% tax on universities that exceed $500,000 per student.
Additionally, schools with donations of more than $750,000 to more than $1.25 million per student will receive a 7% tax. People over $1.25 million to $2 million per student are taxed at 14%. Additionally, institutions that cost more than $2 million per student will be taxed at 21%.
Increase in debt restrictions
Finally, the text includes a $4 trillion increase in debt limits. This is the limit of how much the US can borrow to pay off the loan.
If the debt cap does not increase by the time you reach what is called “X-date,” the US will default on the loan, causing detrimental effects on both the US and the global economy.
