This bill — the Protecting Family and Small Business Tax Cuts Act — would make permanent the tax cuts for individuals, families, and small businesses that were enacted by the Tax Cuts and Jobs Act of 2017. It’d make permanent the reduced personal income tax rates, doubled standard deduction & child tax credit, preserve other personal deductions and credits, and the 20 percent deduction for pass-thru businesses that are set to expire at the end of 2025 under current law. A breakdown of its provisions can be found below.
Personal Tax Rates
The current seven personal income tax brackets that were enacted by the Tax Cuts and Jobs Act would be made permanent:
The 10% bracket applicable up to $9,525 for individuals; and $19,050 for joint filers.
The 12% bracket applicable between $9,525 - $38,700 for individuals; and between $19,050 - $77,400 for joint filers.
The 22% bracket applicable between $38,700 - $82,500 for individuals; and between $77,400 - $165,000 for joint filers.
The 24% bracket applicable between $82,500 - $157,500 for individuals; and between $165,000 - $315,000 for joint filers.
The 32% bracket applicable between $157,500 - $200,000 for individuals; and between $315,000 - $400,000 for joint filers.
The 35% bracket applicable between $200,000 - $500,000 for individuals; and between $400,000 - $600,000 for joint filers.
The 39.6% bracket applicable over $500,000 for individuals; and over $600,000 for joint filers.
Personal Tax Credits and Deductions
Several tax credits and deductions would be permanently modified:
The standard deduction would remain at $12,000 for individuals and $24,000 for married couples filing jointly — roughly double what they were prior to the Tax Cuts and Jobs Act’s enactment.
The Child Tax Credit, also doubled by the Tax Cuts and Jobs Act, would remain at $2,000 and would still be fully refundable up to $1,400 while phasing out for families earning over $400,000. Parents would still be required to provide a child’s valid Social Security Number to receive the credit.
The state and local tax (SALT) deduction would remain capped at $10,000 and taxpayers could choose from sales, income, and property taxes to count toward the deduction.
The mortgage interest deduction would remain unchanged for all homeowners with existing mortgages at the time of the Tax Cuts and Jobs Act’s enactment, while for new mortgages (and those since its enactment) the deduction would be available up to $750,000.
The deduction for medical expenses would still be available for medical expenses exceeding 7.5 percent of adjusted gross income in 2018 and 2019, which would rise to 10 percent beginning in 2020.
Other Personal Tax Provisions
The exclusion threshold for the estate tax (aka the death tax) would stay increased to $11 million for individuals and $22 million for married couples.
The gift tax tax rate would remain lowered from 40 percent to 30 percent, with the basic exclusion of $10 million and the annual exclusion of $14,000 remaining at their current levels, indexed for inflation.
The Alternative Minimum Tax (AMT), which taxpayers must pay if their AMT tax liability exceeds their regular income tax liability, would remain in effect with increased exemptions and phased-out thresholds.
Individuals would still be able to rollover funds in a 529 savings plan to ABLE accounts, which are tax-advantaged for individuals with disabilities and their families.
The personal exemption would be permanently repealed.
Small Business Tax Provisions
Pass-thru businesses would permanently have a 20 percent deduction for non-wage income under certain circumstances, reducing their effective marginal tax rate to no more than 29.6 percent.