LANSING, Mich. (WLNS) – President Donald Trump and Congressional Republicans revealed new details about their tax plan Wednesday.
The plan overhauls the current system, and aims to cut taxes for individuals and corporations.
6 News took a closer look at the proposal to see what it would mean for your bottom line, here’s what we know so far:
The plan aims to simplify our current tax code. To do that, Republicans proposed condensing the number of tax brackets from the current number of 7, to only 3.
The Republican plan does not detail what the income level cutoffs are for the 3 proposed brackets.
What it does tell us, is the top bracket would have a 35 percent tax rate, the middle would have a 25 percent rate, and the lowest would be 12 percent.
Currently, the lowest tax bracket is at 10 percent. Under this new plan, those who make the least would potentially pay more in taxes.
At the opposite end of the spectrum, the current tax rate in top bracket is about 40 percent. So higher income earners would see a reduction under the GOP proposal.
What it leaves unclear is how much the tax rate would change for everyone in the middle.
The plan also increases the standard deduction that is used by most Americans.
Under the proposal, the standard deduction would be $24,000 for married taxpayers filing jointly, and $12,000 for individuals. That nearly doubles the current standard deductions.
What this could do, is put people into a lower tax bracket. It could also create a larger zero tax bracket, or number of people who have little to no taxable income.
If you have kids there’s some good news. The GOP plan calls for an increased child tax credit.
Right now, the credit is at $1,000 per child. However, it’s unclear exactly how much that would increase.
Republicans also proposed a new tax credit of $500 for people who care for someone who is sick or elderly. The taxpayer would be able to claim them as a dependent.
The plan has already been praised by many Republicans who say it will allow workers to keep most of their money.
However, some Democrats say it helps out the wealthiest Americans, while providing almost no relief to middle class taxpayers.
6 News will continue to follow this developing story, and update you with the latest.