Republicans in the House of Representatives released an ambitious and long-awaited tax reform bill Thursday that seeks to simplify the tax code and reduce corporate rates, the latest step as the party works towards passing a major item on its agenda.
The Tax Cuts and Jobs Act reduces the number of tax brackets from seven to five, maintaining the top marginal rate at 39.6 percent, while almost doubling the standard deduction, the amount which can be removed from one’s income prior to taxes. Under the bill, the country’s corporate tax rate would be permanently reduced from 35 percent to 20 percent.
The bill was originally scheduled to be released Wednesday before it was pushed back a day as Republicans fine-tuned the text. GOP members of the Ways and Means Committee, the group primarily responsible for tax-writing, worked into the evening Tuesday and throughout the day Wednesday to address some of the sticking points dividing party members, including state and local tax (SALT) deductions.
After early proposals called for a wholesale elimination of SALT, the deductions were preserved on property taxes, though capped at $10,000. Income tax deductions were eliminated.
On 401(k)s, the text released Thursday appears to maintain the current maximum that individuals may contribute on a tax-free basis at $18,000, following through on a pledge made by President Donald Trump that the plans would not be affected by reform.
“There will be NO change to your 401(k),” tweeted Trump less than two weeks ago. “This has always been a great and popular middle class tax break that works, and it stays!”
House Ways and Means Committee Chairman Kevin Brady, R-Texas, said the plan adheres to budget rules requiring the measure to only add $1.5 trillion to the federal deficit over ten years.
This is a developing story. Please check back for updates.
ABC News’ Trish Turner, John Parkinson and Adam Kelsey contributed to this report.