House tax plan lowers caps on 401(k), cuts state and local deductions
ABC News(WASHINGTON) — The details of the House Republican tax reform bill have continued to be intensely debated even over the last 24 hours, but there are two key areas of compromise between House Republican leaders and the White House, according to two sources familiar with the draft bill.
401Ks – The White House, as the President tweeted, wanted to keep the current amount of annual of tax-free contributions ($18,000); House Republicans wanted to lower the limit to $2,400. The bill, as of this morning, does lower what individuals can contribute tax-free to their 401(k)s – but it lowers it to a point about halfway between the current limit and what House Republicans had initially proposed.
Deduction for State and Local Taxes – The latest draft eliminates the deduction for state and local income taxes. But it retains the deduction for local property taxes.
Estate Taxes — The latest draft of the bill retains the elimination of the estate tax. Although there had been intense internal debate as recently as Tuesday night about phasing it in – increasing the amount exempt from estate taxes (it’s currently $10.9 million for married couples) for the first five years and then eliminating it altogether – sources say the latest draft calls for the complete elimination of the estate tax.
That said, both the White House and House Republican leaders fully anticipate the Senate will not go along with the elimination of the estate tax – and expect this will be negotiated away in conference.
Copyright © 2017, ABC Radio. All rights reserved.
Leave a Reply
You must be logged in to post a comment.