Now that the US House of Representatives has passed the Republican Party’s tax reform bill, the focus shifts to the Senate, which is expected to consider its own version of the GOP’s tax plan shortly after the Thanksgiving holiday.
This makes it a good time to examine the differences between the proposals passed by the House and those contained in the Senate GOP’s plan, as released on 9 November.
In both bills, the individual tax deduction would be doubled for individuals and for families. The number of tax brackets would be reduced to either four in the House version or seven in the Senate proposal, a difference that should be relatively easy to reconcile. The exclusion for the estate tax, always a contentious issue, would be doubled by both bills to well over $10mn, but the House bill proposes eliminating the estate tax in 2024. The Senate GOP bill currently contains no such provision. The House bill suggests limiting the mortgage interest deduction to $500,000, while the Senate version sets the cap at $1mn.
Both bills would set a flat corporate tax rate of 20%, but the House bill would introduce the measure in 2018, while the Senate GOP plan would enact the change one year later.
The adoption tax credit would be continued under both bills, while there are differences in the handling of medical expense deductions – the House version would repeal them, while the Senate version would keep them in place.
Finally, the House bill would repeal most of the State and local tax deductions, but allow one for property taxes, limited to $10,000. The Senate bill would eliminate all such deductions.
For more information, please read:
Everything You Need to Know About the Senate GOP Tax Proposal | Wealth Management