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Tax Reform: Senate Bill vs. House Bill

Republican members of the Senate Finance Committee released highlights of their tax reform bill on Thursday, a week after the House released theirs.

Below are the highlights with a comparison of the two.

Tax rates

Senate: There are seven brackets in the current tax code.  The senate bill maintains the seven brackets with changes to the rates on taxable income.

House: Reduces the number of marginal income tax rates to four: 12% (starting at $12,000 of taxable income for single filers), 25% ($45,000), 35% ($200,000) and 39.6% ($500,000).

401 (k) plans

Senate: No changes to pre-tax limit for tax-deferrals for contributions to 401(k)s and individual retirement accounts.

House: Same

Pass-Through Entities

Senate: Details not provided.

House: A portion of net income distributed from a pass-through business to an owner would be treated as business income and taxed at a 25% instead of the current individual rate.  Tax rates could be as low as 9% for some income for an individual earning less than $75,000 through a pass-through business.

Estate tax

Senate: Doubles the current exemption of $5.49 million ($10.98 million for married couples). The federal estate tax, currently 40%, is levied at death.

House: Doubles exemption beginning in tax-year 2018 and repeals the tax beginning in 2024.


Senate: Repeals the alternative minimum tax.

House: Same

Mortgage deduction

Senate: Maintains the mortgage deduction for existing mortgages and for newly purchased homes up to $1 million.

House: Caps mortgage deduction at $500,000 for new homes.

Charitable deduction

Senate: Preserves deduction for charitable contributions

House: Same, with some minor changes

State and local tax deduction

Senate: Eliminates all state and local tax deductions

House: Ends itemized deduction for state and local income and sales taxes, while allowing itemized deductions for up to $10,000 of property taxes.

Standard deduction

Senate: Doubles standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples.

House: Same

Personal exemptions: 

Senate: Eliminates the $4,050 personal exemption for yourself, your spouse and dependents.

House: Same

Corporate tax rate

Senate: Sets corporate tax rate at 20%, but wants to delay it until 2019

House: Same, but change would take effect in 2018.



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