The GOP budget proposal has been cleared for a fast-track tax policy overhaul. On Thursday, the House narrowly passed the Senate’s budget resolution by a vote of 216 to 212. All Democrats and 20 Republicans voted against the bill.
Despite some last-minute disagreement within the Republican party—primarily from high-tax states like New York and California—the majority of Republicans voted for the elimination of the popular State and Local Tax (SALT) deduction. Those opposed to the removal of SALT argued that taxpayers in their states rely on the deduction and the loss would be a direct hit to the middle class.
Meanwhile, Republicans in favor of the planned overhaul say that the elimination of the SALT deduction would balance out many of their pre-planned tax cuts and would ensure that deductions aren’t disproportionate across income levels to benefit just the wealthy. The non-partisan Tax Policy Center estimates that $1.3 trillion would be saved over 10 years if the SALT deduction were eliminated.
Reconciliation rules within the budget will allow for Senate approval with a simple majority—50 senators in a chamber that holds 52 Republican seats—evading a Democratic filibuster. The full tax plan will be unveiled next week, with a formal bill being introduced before Thanksgiving. Republicans hope to present a significant overhaul of the tax code by end of year, but face many challenges, as it has not been done since 1986.
Here’s what’s in store should the bill be passed:
- Income tax rate cut from 35 percent to 20 percent
- Individual income tax brackets broken down from seven to three: 12 percent, 25 percent and 35 percent
- The standard deduction for individuals doubled to $12,000 and for married couples filing jointly to $24,000
Of the proposed changes, the doubling of the standard deduction for individuals and married couples filing jointly stands to have a direct effect on the mortgage interest deduction and real estate industry.
Stay tuned to RISMedia for more developments.
Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com.Â
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