We've been waiting for it all week, but early Thursday morning republican lawmakers proposed a sweeping rewrite of the tax code.
It calls for $1.51 trillion dollars in tax cuts for corporations and some middle-class families. If you are living in Southern California, here is a quick snapshot of what you need to know, courtesy of EA Eva Rosenberg, otherwise known as the Tax Mama.
The Alternative Minimum Tax, or AMT, will go away.
"That is a good thing," says tax expert Eva Rosenberg. "The bad thing is that we lose our state, or sales tax, deductions, and we know we will have a lot of those in Southern California, and our property tax deduction will be limited to a maximum of $10, 000, which doesn't affect most of us unless we own more than one property."
The mortgage interest deduction will be capped
If your are a current homeowner, you're essentially grandfathered in and can use the deduction. For future home purchases, however, the deduction will be capped at loans worth no more than $500,000 dollars. "For most people [in Southern California] that will really be a hardship because, really, it does cost more than $500,000 to buy a three-bedroom house," says Rosenberg.
The standard deduction roughly doubles
The standard deduction goes up to $24,000 for married couples, from $12,700, and would be set at $12,000 for individuals, from $6,530.
The child tax credit will also expand to $1,600 from $1,000 and there will be an added $300 credit for each parent and non-child dependent, such as older family members. "We're losing the personal exemptions, which were worth over $4000, and they're replacing them with a child tax credit worth $1600, which breaks even on these numbers," said Rosenberg.
The big picture
"Some of this stuff will balance out, but part of the bad news is that we lose the zero percent tax bracket we had," said Rosenberg. "Lower income people may find themselves facing more taxes, middle income people might break even, as long as their mortgages aren't too high, and the wealthy will come out a little bit ahead."
*Quotes were edited for clarity*