Big GOP Tax Package Would Boost Standard Deduction
What You Need to Know
The House Ways and Means Committee plans to consider the three bills of the newly introduced American Families and Jobs Act on Tuesday.
Rep. Jason Smith, R-Mo., said that the temporary boost to the standard deduction was intended to help ease the pain of inflation.
The legislation would repeal a controversial rule on payments via apps like PayPal and Venmo that’s scheduled to take effect this year.
House Ways and Means Committee Chairman Jason Smith, R-Mo., has introduced the American Families and Jobs Act, “a resurrection of the tax bill that both parties worked on at the end of last year, although with additional asks,” according to Jeff Bush of The Washington Update.
The plan includes three bills: the Tax Cuts for Working Families Act, H.R. 3936; the Small Business Jobs Act, H.R. 3937; and the Build It in America Act, H.R. 3938.
Ways and Means plans to consider all three bills on Tuesday.
The Tax Cuts for Working Families Act “would temporarily boost the standard deduction by $2,000 for single filers and $4,000 for married filers for 2024 and 2025, and the bonus amount would phase out for single taxpayers with incomes above $200,000 and married taxpayers with incomes above $400,000,” Erica York, senior economist and research manager at the Tax Foundation in Washington, told ThinkAdvisor Monday in an email.
In 2023, the standard deduction for single filers is $13,850 and for married filers is $27,700, York explained, “so the bonus would be added on top of the existing standard deduction levels.”
Smith said in introducing the legislation that it was designed to help ease the pain of high inflation.
“As we traveled to communities across this country, Americans from all walks of life — workers, parents, farmers and small business owners — have shared their concerns with today’s chronically high prices, climbing interest rates, labor shortages and supply chain failures, as well as the challenge of competing with China,” Smith said.
Rep. Richard Neal, Mass., the top Democrat on the Ways and Means Committee, declared in a statement that “not even a week after their manufactured default crisis and it [the GOP] is back to tax cuts for the wealthy and well-connected. This stoops to a new low even for them: retroactive corporate tax cuts, next-to-nothing for the most vulnerable children and families, and sneaking in favors for Big Oil.”
Neal added: “Make no mistake about it; they are laying the groundwork for even bigger cuts in 2025, and the only way they will ever achieve a balanced budget is by sticking seniors and working families with the bill.”
Tax Reporting Rule Changes
The Small Business Jobs Act would repeal a controversial rule scheduled to take effect this year requiring users of payment apps like PayPal and Venmo to report transactions greater than $600. The bill would keep the threshold at its current level, $20,000.
The bill would also raise the threshold at which business owners must send tax forms to contractors and report their work to the IRS to $5,000. The current $600 threshold has not been adjusted since 1954, Smith said.
