Tax Cuts and Jobs Act - Frequently Asked Questions
Americans have been waiting for years for Washington to fix our broken tax code because they know it will lead to better jobs, more take-home pay, and a stronger economy.
The Tax Cuts and Jobs Act is our answer to the American people. It will deliver much-needed tax relief to millions of families, help our workers and job creators compete and win here at home and around the world, and make the tax code simpler and fairer for all Americans. It will fuel economic growth – leading to more jobs, fairer taxes, and bigger paychecks.
However, defenders of the status quo are already spreading misinformation in an attempt to stop the bill. This page aims to answer some of the frequently asked questions and false claims about the Tax Cuts and Jobs Act and to correct the record.
FALSE CLAIM: “This is just a tax cut for the wealthiest Americans.”
RESPONSE: No. The Tax Cuts and Jobs Act delivers tax relief at every income level – while maintaining the top 39.6% tax rate on high-income earners. It lowers tax rates on low- and middle-income Americans and significantly increases the standard deduction, which means hardworking Americans can immediately take home more of their paychecks.
An independent fact-checker at the Washington Post recently debunked this false claim and rated it with "Four Pinocchio's" - the highest rating the paper gives to false political claims. Click here to read their analysis.
FALSE CLAIM: “This legislation will raise taxes on Americans’ retirement.”
RESPONSE: That’s not so. Our bill retains the popular retirement savings options – such as 401(k)s and Individual Retirement Accounts – as Americans know them today.
FALSE CLAIM: “80% of the tax breaks go to the wealthiest 1% of Americans.”
RESPONSE: Not True. The reality is, the Tax Cuts and Jobs Act is specifically focused on delivering more jobs, fairer taxes, and bigger paychecks to hardworking Americans – not Washington special interests.
Under this bill, the highest earners will continue to face the highest tax rates and pay the most taxes – in both dollar and percentage terms – of any Americans. In fact, our legislation eliminates dozens of costly and complex loopholes and special deals that have historically benefited wealthier Americans the most – precisely so we can reduce tax burdens at every income level.
FALSE CLAIM: “This bill actually raises taxes on the poor.”
RESPONSE: No – this bill delivers crucial tax relief for low-income Americans. The Tax Cuts and Jobs Act significantly lowers the tax burden for low-income Americans by roughly doubling the size of the standard deduction. That means more of each paycheck will be protected from taxes – from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples each year.
The Tax Cuts and Jobs Act also protects and improves tax benefits that help low-income workers and families, including the Earned Income Tax Credit (EITC), a new Family Credit which includes a larger Child Tax Credit, and the Child & Dependent Care Tax Credit.
FALSE CLAIM: “This bill is a direct attack on the middle-class.”
RESPONSE: The Tax Cuts and Jobs Act is a direct and immediate boost for middle-income Americans who have been struggling to get by, let alone get ahead, under today’s broken tax code. It reduces the tax rates for low- and middle-income Americans, and roughly doubles the standard deduction –protecting up to $24,000 of your family’s take-home pay each year from taxes. It delivers much needed support to American families who today are struggling to keep up with the rising costs of child care, higher education, and looking after their loved ones.
With this legislation, middle-income families will get to keep more of the money they earn for what matters to them rather than sending it to the Internal Revenue Service. For example, a typical family of four earning $59,000 (the median household income) will receive a $1,182 tax cut.
Not to mention – because of the historic tax relief for our businesses – this bill will create jobs and increase paychecks so Americans can finally earn a raise after a decade of stagnant wage growth. That’s real money that middle-income Americans can save, spend, and invest as they see fit.
FALSE CLAIM: “By eliminating the personal exemption, this legislation increases taxes on families.”
RESPONSE: The Tax Cuts and Jobs Act takes several bold steps to deliver relief for families. First, our legislation helps families keep more of their paychecks by roughly doubling the size of the standard deduction and lowering tax rates.
This bill establishes a new Family Credit – which includes expanding the Child Tax Credit from $1,000 to $1,600 to help parents with the cost of raising children, and providing a credit of $300 for each parent and non-child dependent to help all families with their everyday expenses. It also preserves the Child & Dependent Care Tax Credit so families don’t have to choose between earning a paycheck and taking care of their children and older dependents such as a disabled grandparent who may need additional support.
Our legislation also simplifies the tax code so that nine out of ten Americans will be able to file their taxes on a form so simple it could fit on a postcard – saving families money as well as precious time and aggravation that today accompanies tax time.
FALSE CLAIM: “This eliminates critical education tax benefits, making it more difficult for Americans to afford the cost of education.”
RESPONSE: Quite the opposite. The Tax Cuts and Jobs Act makes it easier for families to use tax benefits toward the cost of education. Under today’s broken tax code, there are more than a dozen overlapping tax benefits relating to education – all with their own rules and guidelines. By simplifying and enhancing these benefits into a more effective higher education tax credit, our legislation will help more families offset the cost of both college and vocational training programs.
FALSE CLAIM: “Your bill changes the mortgage interest deduction – making it harder for Americans to buy a home and invest in their local communities."
RESPONSE: That’s not so. After receiving feedback from families across the country, we made sure to maintain the mortgage interest deduction in the Tax Cuts and Jobs Act. Our legislation also allows Americans to deduct state and local property taxes. Combined with policies to create jobs, grow paychecks, and strengthen our economy – by far the biggest driver of a strong housing market – maintaining this tax benefit will help more Americans, especially middle-class Americans, achieve the dream of homeownership.
FALSE CLAIM: “Because significantly fewer taxpayers will itemize, fewer Americans will make charitable donations.”
RESPONSE: The Tax Cuts and Jobs Act will continue to preserve the itemized deduction for charitable contributions so that Americans can continue to give back to their local church, charity, or community organization. And by promoting an overall stronger economy – which is by far the biggest driver of charitable giving – our legislation will grow Americans’ paychecks, helping them donate more of their hard-earned money to causes they believe in.
FALSE CLAIM: “Repealing the Death Tax is just a massive giveaway for the wealthiest Americans.”
RESPONSE: Not so. The Death Tax impacts small businesses and farms throughout the nation owned by people who have worked their entire life to build a successful company and create jobs. These families should not have to fear double or even triple taxation from Washington when they pass down their life’s work to the next generation. That’s why our legislation immediately delivers relief from this tax by doubling the earnings exemption and fully repeals it after six years.
FALSE CLAIM: “This gives corporations a tax-free holiday to increase their profits – not hire more workers, increase paychecks, or invest in our economy.”
RESPONSE: The Tax Cuts and Jobs Act includes a transition rule that allows America’s global businesses to bring home foreign earnings at a one-time low rate. This one-time relief will make it far less costly for businesses to invest their foreign earnings in creating jobs and increasing paychecks at home.
FALSE CLAIM: “This is fiscally irresponsible and will add trillions to our deficit.”
RESPONSE: The Tax Cuts and Jobs Act meets all of the requirements set by the budget that recently passed both the House and Senate. It does so by eliminating billions of dollars in unfair special-interest tax breaks that have stifled economic growth. And by helping businesses plan for the future and make long-term investments here at home, this legislation will promote even faster growth – and additional revenues – in the years ahead.
FALSE CLAIM: “This legislation was drafted behind closed doors – without input from the public – and is being rushed through Congress.”
RESPONSE: House Republicans have been working on legislation to overhaul our nation’s broken tax code for six years. Led by the tax-writing Ways and Means Committee, House Republicans unveiled in June 2016 our blueprint for bold, pro-growth tax reform. Building off of the ideas in our blueprint, in September 2017, House Republicans unveiled a unified framework with the White House and the Senate that laid the foundation for the Tax Cuts and Jobs Act.
Since 2011, the Ways and Means Committee has held over 40 hearings focused on providing tax relief to hardworking Americans; strengthening America’s competitiveness so our workers and businesses can succeed at home and around the world; helping Main Street job creators grow their businesses, hire more workers, and increase paychecks; and making the tax code simpler and fairer so Americans can keep more of their hard-earned money.