As reported by Fox 31 Denver, GOP leaders in the House of Representatives recently revealed key details of their tax reform plan. While this tax plan may not be signed into law, at least in its current form, it has already passed an important procedural vote. While this bill overhauls key elements of the corporate tax code, it also affects individuals.
As such, all American taxpayers should have a basic understanding of how this plan might impact their wallets. Here, our experienced Denver tax law attorneys highlight some of the key provisions and policy changes contained within the latest GOP tax reform legislation.
1) Fewer Tax Brackets, Lower Overall Tax Rates
One of the core elements of the GOP tax reform proposal is lower overall tax rates. The bill seeks to reduce brackets and rates. Under current federal law, there are seven different tax brackets for personal income. However, under the new GOP tax bill, that number would be reduced to only four brackets. As these brackets merge, most people would end up in a tax bracket with a lower rate than they are scheduled to pay under their current salaries. There are some limited exceptions.
2) Many Individual Tax Deductions Will be Eliminated
Beyond lowering the overall tax rates, the GOP house bill also raises the standard deduction. For taxpayers who take the standard deduction, this has the potential to be a significant benefit. Though, to pay for the lower overall income tax rates, the corporate tax cut and the increased standard deduction, the GOP plan would eliminate many different individual tax deductions. A significant amount of the individual deductions that are currently available and used by many taxpayers would disappear from the tax code. Some of the most notable examples include:
- Elimination of student loan interest deduction;
- Elimination of medical expense deduction;
- Pharmaceutical drug deduction;
- Certain state and local tax deductions; and
- A cap of $500,000 on the home mortgage interest deduction;
3) New and Expanded Tax Credits
Finally, the GOP tax plan does also include some new and expanded tax credits. This is most important for parents, as the bill proposes to increase the child tax credit from $1,000 per child, to $1,600 per child, a substantial difference. Though, non-parents may benefit from the new tax credits as well, as the tax reform bill also includes an additional, new $300 tax credit for all non-child dependents.
Speak to Our Dedicated Denver Tax Attorneys Today
At Whitcomb, Selinsky, McAuliffe, PC, our Colorado corporate tax lawyers have extensive experience handling complex tax issues. We always stay up to date on the latest developments in tax law, including tax policy chances, court decisions and IRS guidance. To learn more about what our law firm can do for you, please call us now at (866) 476-4558 to schedule your fully confidential initial case evaluation. From our office in Denver, we represent tax law clients throughout Colorado.