Congressional Republicans on Tuesday were speeding toward an agreement on a massive tax package that would ease the hit on Americans living in high-tax states and appease corporations that could have lost precious tax breaks. Negotiators were working to expand a deduction for state and local taxes to allow individuals to deduct income taxes as well as property taxes, say two congressional aides. Negotiators were also working to eliminate the alternative minimum tax for corporations, the AP reports. Negotiators agreed to let homeowners deduct interest on the first $750,000 of a new mortgage, down from the current limit of $1 million, the aides say. Negotiators were still working Tuesday on how to pay for the expanded tax breaks, though Republican lawmakers were optimistic that a deal was eminent.
The Senate's number two Republican, Sen. John Cornyn of Texas, says a deal could come as soon as Tuesday. Lawmakers say workers could start seeing changes in the amount of taxes withheld from their paychecks early next year. However, taxpayers won't file their 2018 tax returns until the following year. Both the House and Senate bills would scale back the deduction for state and local taxes, limiting it to $10,000 in property taxes. The issue is important to lawmakers from high-tax states such as New York, New Jersey, and California. Rep. Tom Reed of NY, warned that nothing is final until the whole package is worked out. But he says he believes negotiators have found a way to include income taxes in the deduction for state and local taxes.
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