The Ways and Means Committee will meet Tuesday to consider the plan. Here’s what’s currently included for individuals.
To pay for some of the sweeping tax breaks they are proposing, Republicans have included $880 billion in cuts to Medicaid, the federal health care program for the poorest Americans. This has already been one of the most controversial parts of the bills, with Democratic lawmakers and even some Republicans, including Missouri Sen. Josh Hawley, blasting the cuts.
The bill would cut taxes on tips and overtime for some workers starting in 2025 through the end of 2028. Under the tips section, the bill attempts to limit who can qualify for the tax break so that higher-wage workers aren’t taking advantage of the break. It specifies only those working jobs that typically receive tips qualify, and it is subject to a $160,000 income limit.
The bill temporarily increases the standard deduction, by $1,000 through 2029.
Rather than erase taxes on Social Security—a campaign trail promise from Trump—it also gives seniors aged 65 and older an additional $4,000 for the standard deduction from 2025 through 2028. This additional deduction starts phasing out for individuals who earn $75,000 ($150,000 for married couples).
The state and local tax deduction, also known as SALT, would triple from $10,000 to $30,000 for married couples. This is a boon to high-tax states like New York and California, and lawmakers from those states would like the deduction to reach even higher. The SALT cap was reduced to $10,000 in Trump’s first term.
The bill also temporarily increases the child tax credit, from $2,000 to $2,500, through 2029.
Those with a car made in the U.S. would be able to deduct some car loan interest, though this measure begins to phase out for those earning $100,000 a year or more.
While taxpayers are usually allowed to deduct charitable donations only if they itemize their taxes, the bill would allow some to deduct up to $150 per year ($300 for married couples) when taking the standard deduction.
The bill creates a new tax-preferred savings account for children called a “money account for growth and advancement,” or MAGA account. Parents would be able to invest $5,000 per year, and earnings on the investments could be used to pay for school or job training expenses, buy a home, or start a small business. Those born in 2025 to 2028 would receive $1,000.
Starting next year, the $7,500 credit for purchasing new electric vehicles created under President Joe Biden would be eliminated. Renewable energy tax credits would also be phased out.
Non-citizens in the U.S. could pay a new 5% tax on money sent overseas, with American citizens being exempt.
Another provision would allow the State Department to eliminate the tax-exempt status for “terrorist supporting” non-profit organizations as designated by the agency.
