$30,000 Tax Bonus Announced by Donald Trump — The US House Ways and Means Committee has presented a draft of a much-awaited tax bill, which former President Donald Trump has named “One Big, Beautiful Bill”. This bill will not only re-implement the tax cuts of his first term but will also add several new provisions to try to provide relief to the public ahead of the 2024 elections.
Total cost and objectives of the bill
This bill proposes a tax cut of $4 trillion over 10 years and a reduction in government spending of at least $1.5 trillion. This is considered to be the Republican Party’s biggest tax reform bill so far. Through this, the party is making its electoral agenda clear that they want to accelerate America’s economic pace by giving tax relief.
Expansion of Trump’s old tax law
This bill proposes to permanently implement several provisions of Trump’s 2017 tax law, the most prominent of which are:
Making the top income tax rate of 37% permanent.
However, Trump has recently told Speaker Mike Johnson that he wants to make this rate 39.6% for high income earners (those earning more than $2.5 million), but the rate of 37% has been maintained in the bill for now.
Relief for Social Security and senior citizens
Trump had promised to remove the tax on Social Security during the election campaign. Although this is not possible right now due to the current budget process, the bill instead proposes an additional bonus of $4,000 to provide relief to senior citizens, which will be given in addition to the standard deduction.
Eliminate tax on tips and overtime income
Under the bill, tips and overtime income will not be taxed until 2028. This was a big promise of Trump, which Ways and Means Committee Chairman Jason Smith is now making a part of the law.
Increase in state and local tax deduction
The bill proposes to increase the state and local tax (SALT) deduction from the current $10,000 to $30,000. This change will bring relief to those who pay more taxes. However, lawmakers from high-tax areas are demanding to increase this limit further to $124,000, especially for couples filing jointly.
There is still disagreement on this issue and this bill may become a hindrance in its passage.
Taxes on wealthy universities will increase
The bill proposes to increase the tax on endowment income of private universities from 1.4% to 21%. This will directly affect educational institutions with high income. This step has been taken with the aim of balancing social inequality a little.
Relief for children and small businessmen
The bill talks about increasing the child tax credit from $2,000 to $2,500, and this change will be retroactive from 2025, that is, it will be applied to past income as well. Apart from this:
- The standard deduction will also be increased so that more money can come into the hands of low-income families.
- The estate tax exemption will be increased to $15 million.
- The 20% tax deduction for closely-held businesses will be increased to 23%.
Changes in the national debt ceiling
The bill proposes to increase the national debt ceiling to $4 trillion, which is less than the Senate’s demand of $5 trillion. Its purpose is that there is no need to increase the debt limit again till the 2026 midterm elections.
Political strategy and possibilities
House Speaker Mike Johnson said on Monday that there is a plan to pass this bill by Memorial Day. After this, this bill will go to the Senate, where changes in its language and many provisions are possible.
The Republican Party has a very thin majority in the House, so to get the bill passed, they will need the support of almost all the members of their party. Democrats have already questioned this proposal, especially the relief being given to the rich.
Conclusion
This new tax bill is a big attempt to implement Trump’s 2024 election promises. Through this, not only has there been talk of giving tax relief to the public, but it has also been ensured that the big business class, senior citizens, and the middle class get benefits.
However, many provisions of this bill are controversial and some Republican MPs including the Democratic Party are not completely satisfied with it. Now it remains to be seen whether this bill is passed without major amendments or it will have to be rewritten in the Senate.
FAQs on $30,000 Tax Bonus Announced by Donald Trump
Q. What is the total tax cut proposed in the new bill?
A. The bill proposes over $4 trillion in tax cuts over 10 years.
Q. Will the top income tax rate change?
A. No, the 37% top rate from Trump’s 2017 law will remain permanent.
Q. Is there any relief for seniors?
A. Yes, the bill provides a $4,000 bonus on top of the standard deduction for seniors.
