House Committee Unveils Tax Plan: Extends Tax Cuts and Expands Child Tax Credit 83

 in News / Tax Guide  tagged House tax bill / Tax Cuts and Jobs Act extension by (updated 47 days ago)

The House Ways and Means Committee has presented its comprehensive tax package, valued at over $4 trillion, which includes extending key provisions of the Tax Cuts and Jobs Act (TCJA) set to expire. The committee is scheduled to formally review the 28-page bill on May 13.

Following budget guidelines passed by both the House and Senate in April, the Ways and Means Committee was tasked with outlining $4 trillion in tax reductions. This figure could potentially rise to $4.5 trillion if other House committees achieve greater spending cuts in their respective legislative efforts.

The proposed legislation, released by House tax writers on May 9, aims to make permanent the existing individual income tax bracket rates beyond their December 31 expiration date. It also proposes increasing the percentages used to calculate qualified business income under Section 199A.

House Speaker Mike Johnson (R-La.) expressed optimism that all 11 relevant House committees will advance their portions of the reconciliation bill, allowing the full House to vote on the assembled package by Memorial Day. Subsequently, the bill would proceed to the Senate. Both Speaker Johnson and Treasury Secretary Scott Bessent have stated their goal of securing passage in both chambers and obtaining President Trump’s signature by July 4.

Detailed information regarding the proposed changes is available in a document released by the Joint Committee on Taxation, also on May 9.

Notably, the committee’s bill does not address potential modifications to the state and local tax (SALT) deduction limit or recent White House proposals concerning taxes on tips and overtime pay. Typically, the committee chair introduces a preliminary version of the bill at the markup stage, serving as a basis for discussion and amendments.

Key provisions outlined in the House tax writers’ legislation thus far include:

  • Income Tax Brackets: Increasing income thresholds for most tax brackets, along with an added inflation adjustment.
  • Standard Deduction: Extending the current increased standard deduction, with a temporary boost of $2,000 for those filing jointly.
  • Child Tax Credit: Extending the child tax credit and raising it to $2,500 per child through 2028, reverting to $2,000 thereafter.
  • Personal Exemptions: Eliminating the deduction for personal exemptions, setting it at $0.
  • Passthrough Deduction: Making the 20 percent passthrough deduction permanent, with an increase to 22 percent for the three percentages used in qualified business income calculations.
  • Estate and Gift Tax Exemption: Permanently increasing the estate and gift tax exemption to an inflation-adjusted $15 million.
  • Alternative Minimum Tax (AMT): Permanently repealing the expiration of the TCJA’s increases to the AMT exemption amounts and phase-out thresholds.
  • Home Mortgage Interest Deduction: Making permanent the $750,000 limitation on acquisition indebtedness for home mortgage interest deductibility.
  • Miscellaneous Itemized Deductions: Permanently repealing the deduction for miscellaneous itemized deductions.
  • Pease Limitation: Permanently repealing the Pease limitation, which reduces the value of itemized deductions for higher-income taxpayers.
  • Moving Expenses: Permanently repealing the deduction for moving expenses, except for members of the armed forces.
  • Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI): Lowering preferential rates by increasing the FDII deduction from 21.875 percent to 37.5 percent and the GILTI deduction from 37.5 percent to 50 percent.
  • Base Erosion and Anti-Abuse Tax (BEAT): Repealing scheduled increases to the BEAT rate, which was set to rise from 10 percent to 12.5 percent on modified taxable income.

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