GOP tax bill: No changes to 401(k), doubles deductions for middle class, limits state and local tax

House Republicans on Thursday unveiled their long-awaited tax bill which preserves the popular 401K retirement account, lowers rates for many individual households but trims deductions for state and local taxes.

The proposal, which was touted as a "game changer," would add $1.5 trillion to the nation's debt over the next decade as Republicans largely abandoned fiscal discipline in a plan that could secure a legislative achievement for President Trump and score a political win ahead of next year's midterm elections.

Trump promised in a statement that his administration "will work tirelessly to make good on our promise to the working people who built our nation and deliver historic tax cuts and reforms -- the rocket fuel our economy needs to soar higher than ever before."

A summary of the plan, which was made available to reporters ahead of its public release, would also reduce the cap on the popular deduction to interest on mortgages to $500,000 for newly purchased homes. The current cap is $1 million.

The plan also limits the deductibility of local property taxes to $10,000 while eliminating the deduction for state income taxes. Republicans in high-tax states such as New York and New Jersey had come out strongly against it.

“I view the elimination of the deduction as a geographic redistribution of wealth, picking winners and losers,” New York Republican Rep. Lee Zeldin said. “I don’t want my home state to be a loser, and that really shouldn’t come as any surprise.”

Called the Tax Cuts and Jobs Act, the GOP plan would also leave the top individual tax rate at 39.6 percent.

The child tax credit will rise to $1,600 from $1,000, though the $4,050 per child exemption would be repealed.

The legislation is the first major revamp of the U.S. tax code in three decades and has been a top legislative and political priority of Republicans.

“This is the beginning of the end of this horrible tax code in America,” Rep. Kevin Brady told Fox News.

House Speaker Paul Ryan touted the plan as a break for the middle class.

“It is for the families who are out there living paycheck to paycheck who just keep getting squeezed," he said.

President Trump called the legislation "another important step toward providing massive tax relief for the American people" and added, "We are just getting started, and there is much work left to do."

The rollout was delayed a day as Republicans were still hammering out specifics.

Lawmakers had been at odds and scrambling to bridge deep divides over contribution limits to 401(k) retirement accounts and the possible elimination of a tax break for state and local taxes.

Potential changes to the plans created an uproar after rumors surfaced that Republicans were considering a plan to slash pretax donation limits from $18,000 for most people to as low as $2,400.

Trump is expected to meet with House Republicans at the White House Thursday afternoon. Markups to the bill could come as early as Monday.

The House Ways and Means Committee plans to consider the bill next week.

"This is our opportunity to make tax reform a reality and deliver the most transformational tax cuts in a generation," Brady said on Thursday.

House Majority Leader Rep. Kevin McCarthy, R-Calif., said Thursday that this bill "for every member, this could be the most significant bill they make a decision on in congress."

Trump has recently said he’d like to see the bill become law by Christmas.

The Associated Press contributed to this report.