Proposal boosts standard deduction, increases maximum child tax credit
Republicans have released the first public draft of their new tax bill, aiming to extend and expand parts of Trump’s 2017 tax cuts starting in 2025. Key provisions include:
- A $1,000 increase to the standard deduction for individuals ($2,000 for couples)
- Raising the child tax credit from $2,000 to $2,500
- Adjusting tax brackets for inflation in 2026 to increase take-home pay
- A permanent increase in the estate tax exemption to $15 million per person
- Expanded and permanent deductions for certain closely held businesses
These changes are expected to reduce federal revenue by $4.9 trillion over 10 years. Though some tax benefits would expire after a few years, Republicans hope the immediate financial impact—larger refunds and lower withholding—will appeal to voters ahead of the 2026 midterms. The bill doesn’t yet address several divisive issues, like the cap on state and local tax deductions or Trump’s proposed tariffs and tax cuts on tips and Social Security. Democrats oppose the bill, criticizing it for favoring the wealthy and lacking transparency.