WASHINGTON — Congressional Republicans were on the verge of approving the first major overhaul of the nation’s tax laws in three decades as negotiators locked down the final version of the bill Friday and two key Senate holdouts announced that they would support the measure.
Jubilant GOP leaders said they expect to vote on the $1.5 trillion legislation in the coming days and deliver it to President Donald J. Trump by the end of next week, handing the White House its first significant legislative victory.
While independent analysts predict that most Marylanders would receive a tax break under the bill, the proposal has drawn sharp criticism from Democrats for providing more generous breaks to corporations and the wealthy than to middle-class families.
If approved, the legislation may prompt a debate in Annapolis next year over the state’s tax laws.
For income taxes, the measure would lower individual rates for most people and nearly double the standard deduction — to $24,000 for a married couple. But it would also limit popular deductions such as those for mortgage interest and state and local taxes, a provision claimed by a higher share of Marylanders than by filers in any other state.
“This is what the American people have been waiting for,” House Speaker Paul Ryan said. “We’re in the final stretch.”
Republican leaders have been eager for a win after their months-long effort to repeal the Affordable Care Act fizzled this year. While progress on the bill has at times been touch and go, the measure got a huge shot of momentum Friday when Republican Sens. Marco Rubio of Florida and Bob Corker of Tennessee said they would support it.
Senate Republicans appeared poised to approve a major tax overhaul that would deliver President Donald J. Trump one of his first legislative victories while potentially changing the way thousands of Marylanders file their annual income taxes.
Corker, who is not running for re-election and who has often sparred publicly with Trump, was the only Republican to vote against the bill when it was approved by the Senate earlier this month. Rubio raised last-minute opposition to the bill this week to secure a more generous child tax credit.
Because the proposal is expected to have no Democratic support, Republicans have a narrow margin for success: GOP leaders can afford to lose only two votes in the Senate.
Republicans are counting on Sens. John McCain of Arizona, who is undergoing treatment for brain cancer, and Thad Cochran of Mississippi, who is also recovering from medical treatment, to vote next week.
House leaders said their chamber will vote Tuesday.
Trump described the legislation Friday as “monumental” and said it would “be the biggest tax decrease, or tax cut, in the history of our country.”
But there are caveats to that claim. Some analysts predict that millions of Americans — and hundreds of thousands of Marylanders — would wind up paying more under the plan. And while congressional scorekeepers say the bill will lift the economy, they also say the growth will not be enough to offset the revenue lost by the cuts.
The Joint Committee on Taxation estimated that an earlier version of the bill would add $1 trillion to federal budget deficits over a decade.
Perhaps the most significant setback for Maryland filers is the cap the legislation would place on the state and local tax deduction. About 46 percent of Marylanders claim that deduction, according to the Internal Revenue Service data. The average size of the deduction in Maryland in 2015 was about $13,000.
The legislation would limit the deduction to $10,000 a year.
“That’s going to have a major impact in Maryland,” said Sen. Ben Cardin, the state’s senior senator and a Democratic member of the Senate Finance Committee. “Maryland gets hit harder than other states.”
State officials remained relatively quiet as Congress raced to pass the legislation by year’s end. Gov. Larry Hogan, a Republican, has previously said through a spokeswoman that the administration has “serious concerns about the potential removal of long-standing tax exemptions.”
Democrats have pressed Hogan to actively oppose the measure.
Neither the state comptroller, Democrat Peter Franchot, nor the Department of Legislative Services has released an estimate of the potential impact on state revenue. That is probably because the particulars of the legislation have repeatedly changed over the past several weeks.
Franchot’s office declined to comment on the bill.
Assessing the impact on taxpayers is also dicey. The left-leaning Institute on Taxation and Economic Policy predicts that about 74 percent of Marylanders would receive a cut while about 19 percent would be hit with an increase. Overall, the average change for taxpayers in the earlier Senate version of the bill would have been about a $1,500 reduction, the group said.
Changes to federal tax law could have a significant impact on state taxes — both how much residents pay and how much the state collects. State tax law allows filers to itemize deductions only if they have also done so on their federal form, for instance. That means some filers who take advantage of the larger standard deduction at the federal level could wind up paying far more in state taxes, where the standard deduction is less.
“There are winners and losers, and without looking at each individual situation it’s impossible to determine which is which,” said Greg Horning, a director at the Sparks-based financial consulting firm SC&H Group.
Horning said he expects a significant drop in the number of residents filing itemized returns, and so for many taxpayers the process will be simpler. He said some taxpayers should be thinking now about accelerating state and real estate tax payments by year’s end to ensure they maximize deductions under the current system.
“The loss of the deduction above $10,000 in state and local taxes is a significant blow to many,” Horning said. “There will [also] be people who absolutely will be in a better spot on a net basis.”
The bill permanently lowers corporate rates from 35 percent to 21 percent. While it drops rates for many individuals, those cuts would expire in 2025. The new top individual rate, 37 percent, would kick in at an annual income levels of around $500,000.
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Negotiators working to reconcile the House and Senate bills abandoned some provisions that ran into resistance. The latest version dropped a proposal to tax in-kind tuition payments for graduate students as well as a proposed repeal of deductions for so-called private activity bonds used to finance public projects.
The package keeps in place a decades-old tax rule Republicans had wanted to repeal, the so-called Johnson amendment, which limits the ability of churches and nonprofits to engage in political activity.
The bill would eliminate a requirement that everyone obtain health insurance or face a tax penalty. Though widely unpopular, the provision was central to the 2010 Affordable Care Act because it ensured that people would not wait until they got sick to buy health insurance.
Negotiators met Friday morning to finish the bill before its release and said they were optimistic that they had the votes for passage in the House and Senate, enabling them to meet Trump's goal for finishing by Christmas.
“I'm confident both chambers will pass it next week,” said Sen. Pat Toomey, a Pennsylvania Republican and an architect of the bill.