Key proposals in the GOP tax plan that affect families
Key provisions in the GOP tax plan that affect families:
Nearly doubles the standard deduction used by most Americans to $12,000 for individuals and $24,000 for families. This would benefits some families. It would also limit the number of people who itemize their deductions, as this is only done when those deductions exceed the standard.
But it repeals other deductions that may be valuable to families such as those for medical expenses and student loan interest. Limits mortgage interest deduction and eliminates ability to write off state and local taxes, an issue of importance in high-tax states.
CHILD TAX CREDIT
The child tax credit would increase from $1,000 to $1,600. This allows most taxpayers to receive a credit for each of their children under age 17. A credit reduces your tax bill dollar-for-dollar, so is considered one of the more valuable tax perks.
Under the proposal released this week, the first $1,000 would be refundable but the added $600 is not.
So Americans whose tax bill is zero, such as the low income, would not benefit from the increase. The proposal also allows more people to claim the credit, increasing the income level before it phases out to $115,000 for single parents and $230,000 for married parents.
But the plan removes the $4,050 personal exemption, which can currently be claimed for a taxpayer, their spouse and each of their dependent children.
Establishes a $300 family credit for taxpayer, spouse and non-child dependent, such as an ailing parent or adult child with a disability. This is only in effect for five years and not refundable.
DEPENDENT CARE ASSISTANCE
Repeals employer-provided dependent care assistance program benefit, which allow people to set aside up to $5,000 pretax to pay the cost of care for a child or other family member who needs care.
Repeals a $13,570 per-child adoption credit for adoption-related expenses. Applies to both special needs and non-special needs adoptions.
Allows people to set aside money in a 529 education savings plan for an unborn child. These plans are used to help save for higher education, they grow tax-free and withdrawals for educational expenses are untaxed. The giver may get a tax break as well depending on their state law and what plan they use.