House Republicans would preserve the popular retirement account for middle-class Americans while limiting a cherished deduction for homeowners in a sweeping tax cut plan that would add $1.5 trillion to the nation’s debt.
GOP leaders briefed rank-and-file lawmakers on the proposal this morning ahead of a formal rollout and a show of unity event at the White House with President Donald Trump. A major revamp of the tax code, the first in three decades, is a top legislative and political priority of Republicans.
Details were contained in a summary obtained by The Associated Press.
The proposal would leave intact the existing rules on 401(k) retirement accounts and the ability of Americans to contribute up to $18,000 into the accounts tax-free.
But the plan limits the widely-used deduction for mortgage interest for newly purchased homes at up to $500,000, a sharp reduction from the current $1 million cap.
The plan also limits the deductibility of local property taxes to $10,000 while eliminating the deduction for state income taxes, which generated significant opposition from Republicans in high-tax states such as New York and New Jersey.
The child tax credit would be increased from $1,000 to $1,600, though the $4,050 per child exemption would be repealed.
