House GOP Pushes New Tax Cut Bill — Here’s What It Means for Your Wallet

Some surprising and new tax cuts are part of a bill being pushed through the House by Republicans. These cuts could affect the wallets of millions of Americans.

The House Ways and Means Committee passed the plan on Wednesday. It includes a number of other tax cuts and makes Mr. Trump’s tax cuts from 2017 permanent.

Most people wouldn’t notice a big difference if the 2017 Tax Cuts and Jobs Act was extended because their tax brackets would stay the same as they have been since the cuts went into effect in 2018.

A study by the Tax Foundation research that more than six out of ten taxpayers would see their taxes go up in 2026 if there was no extension.

And the House Ways and Means Committee says that the suggested package would save Americans an average of $1,300 on their taxes and make the 2017 tax cuts last longer.

Among the other tax cuts are ones that Mr. Trump promised during the campaign, like getting rid of the tax on overtime pay. There are also new parts that would lower taxes for parents and older citizens.

The Republican Speaker of the House, Mike Johnson, from Louisiana, wants to get the draft law to the Senate by Memorial Day. However, the law is likely to change as it goes through the congressional process.

Democratic senators are against the bill’s changes to food stamps and Medicaid. These changes are part of the GOP’s plan to save $880 billion to help pay for the tax cuts.

Some Democrats also pointed out that some of Mr. Trump’s promised tax cuts, like getting rid of tip taxes, would not be very helpful because they would not last past 2028.

A spokesman for Virginia Democrat Rep. Don Beyer, who is on the House Ways and Means Committee, said, “He made provisions like addressing taxes on tips and overtime pay temporary, as opposed to the cuts for the richest 1%, which they made permanent.”

Still, the House tax panel’s proposal, which was made public on Wednesday, includes a lot of tax breaks that could be put into effect soon. The following would happen because of the law:

Adds a new $4,000 tax break for people over 65.

An extra $4,000 would be deducted from each tax return for people 65 and older as a new tax benefit. The new reduction could help people who take the standard deduction or list their items.

The $4,000 deduction would only be available to people whose modified adjusted gross income is less than $75,000 for single filers and $150,000 for married couples filing joint forms. This means that there would be a limit on how much money people could earn.

People would be able to get the tax credit starting with the current tax year (2025) and going through 2028.

But, as Mr. Trump promised during his campaign, there is no plan to remove taxes on Social Security income. This is a big hole in the most current version of the House measure for seniors.

Since income taxes directly pay for Social Security, the plan to get rid of those taxes was not well received. Policy experts have warned that this is likely to make the trust funds’ failure happen faster.

Raises the standard credit for all taxpayers.

The current standard deduction ends on December 31, 2018. It was raised as part of the 2017 tax change. The House GOP bill would make the bigger benefit from the Tax Cuts and Jobs Act permanent and make it better.

Starting with the 2025 tax year and going through 2028, the standard deduction would go up in the following ways:

• For single people, the standard deduction would go up from $15,000 to $16,000.
• Heads of households would get $24,000 instead of $22,500.
• For married people, the fee to file jointly would go up from $30,000 to $32,000.

This is because the standard deduction drops your taxable income by that much. This means that you pay less tax. If a single person makes $50,000 a year, the suggested standard deduction would lower that amount of taxable income to $34,000 for the 2025 tax year.

The Child Tax Credit is made bigger and longer.

The House bill also extends the $2,000 kid Tax Credit. It would have gone back to its level of $1,000 per approved child before the Tax Cuts and Jobs Act in 2026 if the bill hadn’t been passed.

The change would last forever, according to the House Ways and Means Committee.

The plan would also raise the child tax credit to $2,500 per child from the current tax year (2025) through 2028. After that, it would go back to $2,000 per child.

The rule for filing 1099-Ks has been taken away.

The suggested law would also get rid of a controversial law that said payment services like Venmo and PayPal had to send 1099-K tax forms to anyone getting more than $600.

It used to be that these payment companies only had to tell the IRS about their users’ income if they made more than $20,000 from more than 200 transactions.

The IRS put off putting the $600 rule into effect because some web sites and Republican lawmakers were against it.

Increases the pass-through deduction for small companies

It would also raise the small business pass-through credit, which was made possible by the Tax Cuts and Jobs Act.

To lower their tax bills, small businesses like partnerships, sole proprietorships (which often hire gig workers), and S corporations can deduct 20% of their qualified business income from their taxes. Under the new plan, the reduction would go up to 23%.

Gets rid of tip taxes

During his campaign, Mr. Trump said he would get rid of paid income taxes, but only from the 2025 tax year to the 2028 tax year.

A bill summary from the House Ways and Means Committee says that this part of the bill would create “an above-the-line deduction for qualified tips received by a person in an occupation which traditionally and customarily receives tips during a given taxable year.”

Takes away the VAT on overtime pay

The other idea from Mr. Trump to not tax extra pay for qualified workers would also be put into action, but only for three years.

A deduction above the line for overtime would be set up by the House bill. It would last from the current tax year (2025) through 2028.

Allow interest to be taken off of car loans

The House plan would get rid of taxes on interest by letting people deduct up to $10,000 in auto loan interest.

In the case of single taxes, this would end for those who made more than $100,000 a year, and for married couples, it would end for those who made more than $200,000.

The cars must have been put together in the United States in order for the discount to apply.

This tax break would only be available for the current tax year (2025) through 2028.

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