Tax Reform: Senate Bill vs. House Bill
By Mark FisselPosted on November 10th, 2017
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.
AMT
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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