How the New GOP Tax Plan Would Impact Your Bottom Line

Photo by Jim Barber / Shutterstock.com

Republicans unveiled what they’re calling a “framework” for tax reform Wednesday. It may raise more questions than it answers, however.

Titled “Uniform Framework for Fixing Our Broken Tax Code,” the nine-page document is essentially an outline of what GOP leaders envision for the tax code.

It was crafted by members of the Trump administration, the U.S. House of Representatives’ Ways and Means Committee and the U.S. Senate’s Finance Committee, according to a House announcement.

As pundits, reporters and others have publicly noted, the tax reform plan is shy on details.

Scott Greenberg, senior analyst for the nonprofit Tax Foundation, writes:

“Today’s framework contains only the broad outlines of a potential tax bill, leaving a number of details to be determined by the tax-writing committees in Congress.”

To be clear, the information released by Republicans Wednesday is not tax reform itself. It is not even a draft of proposed legislation that would update America’s tax laws. It’s more of a to-do list, or even a wish list.

But the GOP document provides the most informative glance yet into what Republicans have in mind for tax reform — even if it’s remarkably similar to the plan announced by the White House five months ago.

Furthermore, if the GOP successfully navigates the long legislative road ahead to tax reform, it will be the first time in three decades the U.S. tax code was overhauled.

Stuart E. Eizenstat, ambassador for the Brookings Institution, explains:

“The 1986 Tax Reform Act, signed by President Reagan almost exactly 31 years ago, was the first across-the-board tax reduction for everyone since the Kennedy tax cuts, and there have been none since. … The essence of the Reagan plan, embraced by the Democratic leadership that controlled the Congress, was to create a fairer, simpler tax system, with lower rates and fewer tax breaks for the wealthy and corporations, that did not inflate the budget deficit.”

We’ve plucked from the latest GOP tax plan the proposed changes that will affect individual taxpayers’ pocketbooks if the plan becomes reality along the lines being suggested now.

What would change for individual taxpayers

The GOP’s framework for tax reform would reduce the number of individual income tax brackets from seven to three, though it doesn’t specify income cutoffs for the new brackets. The three brackets would be:

  • 12 percent
  • 25 percent
  • 35 percent

The plan also calls for doubling of the standard deduction, along with eliminating “most” itemized deductions.

The document does not specify which deductions would be red-lined, but pledges typical middle-class families would see less of their income subject to federal taxes.

It continues:

“In combination, these changes simplify tax filing and effectively create a larger ‘zero tax bracket’ by eliminating taxes on the first $24,000 of income earned by a married couple and $12,000 earned by a single individual.”

Other proposed changes that would affect some individuals include:

  • Increasing the income limits for the Child Tax Credit, thereby making it available to more people.
  • Providing a $500 nonrefundable tax credit for nonchild dependents.
  • Repealing the alternative minimum tax, or AMT.
  • Repealing the estate tax, which the plan refers to as “the death tax.”

To learn more about which taxpayers would most benefit from eliminating the estate tax — among other GOP tax proposals — check out Money Talks News founder Stacy Johnson’s recent article “The Single Biggest Lie of Trump’s Tax Plan.”

What would remain the same for individual taxpayers

Two big-ticket tax breaks would be retained under the tax proposal:

  • Home mortgage interest deduction
  • Deductions for donations to charity

According to the plan, “These tax benefits help accomplish important goals that strengthen civil society, as opposed to dependence on government: homeownership and charitable giving.”

What’s your take on Republicans’ plans for what could be the first overhaul of the tax code in 30 years? Sound off below or over on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
25 Things You Should Never Buy — and What to Buy Instead
25 Things You Should Never Buy — and What to Buy Instead

If you really want to save money, become a more intentional shopper.

9 Forgotten Frugal Strategies — and How to Resurrect Them
9 Forgotten Frugal Strategies — and How to Resurrect Them

These time-tested methods can help us live smarter today.

Don’t Toss These 7 Household Items — Sell Them
Don’t Toss These 7 Household Items — Sell Them

Here’s how to earn cash as you give new life to these unwanted items.

6 Ways to Guarantee Yourself a Steady Retirement Income
6 Ways to Guarantee Yourself a Steady Retirement Income

Saving is just one part of the retirement equation. Do this now to guarantee income in your golden years.

15 of the Most Outrageously Overpriced Products
15 of the Most Outrageously Overpriced Products

Retailers mark up products by hundreds of times their cost — but you don’t have to pay the premium.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

10 Things You Should Never Do With Bleach
10 Things You Should Never Do With Bleach

Does the pandemic have you reaching for bleach more than ever before? Learn the ins and outs of using this powerful disinfectant.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.