How will Minnesotans be impacted by the tax reform bill?

(KMSP) - Congress has come even closer to passing the biggest tax reform bill in decades after two key Senators endorsed the legislation. 

The House and Senate will still have to approve the tax reform bill, but accountants have already started planning for the bill’s impact. 

Republicans believe the measure will cut taxes for millions, but critics argue it will benefit the wealthy. 

“This is going to be one of the great Christmas gifts to middle income people,” President Trump said. 

The president touted the benefits of the final version of the tax bill Congress plans to vote on next week. 

“Jobs are going to come pouring back into this country, which we need very much,” he said. 

If the bill passes, it will cut the corporate tax rate from 35 percent to 21 percent. It would also lower most individual income tax rates, double the standard deduction and create a large child tax credit for low-income families. At the same time, it would cap the local and state tax deductions to $10,000 and the debt eligible for the mortgage interest deduction at $750,000.

Steve Warren, a Minneapolis CPA and tax expert told Fox 9 that the bill’s biggest impact besides lower income tax rates would be the doubling of the standard deduction. 

“What you take is the higher of your standard deduction and if it’s more, your itemized deduction,” Warren said. “With that higher standard deduction, far fewer people are going to be itemizing. But you can still itemize for a lot of those same folks in 2017.”

He advised people to think about making any 2018 charitable contributions or their January mortgage payments this year instead. 

“For a lot of people they’re going to be in a higher tax bracket and owe more in income this year than next year,” Warren explained. “So, you’re going to get more benefit from that income deduction when your rates are higher now, than later.” 

The House and Senate plan to vote on the bill next week. For many Americans, it could have an immediate impact as they could see changes in their pay checks sometime early next year.