Highlights of House, Senate GOP bills to overhaul tax code
By The Associated Press
Nov. 17, 2017
The House passed a nearly $1.5 trillion tax bill that differs from legislation approved by the Senate Finance Committee. A comparison of the Republican-written measures:
—Personal income tax rates: House bill condenses current seven brackets to four: 12, 25, 35 and 39.6 percent. Senate measure retains seven brackets but changes them to 10, 12, 22, 24, 32, 35 and 38.5 percent. Under current law, top bracket is 39.6 percent. The Senate bill ends the reductions in 2026; they're permanent in the House version.
—Standard deduction: Used by about 70 percent of U.S. taxpayers, currently $6,350 for individuals and $12,700 for married couples. House, Senate bills both double those levels to $12,000 for individuals and $24,000 for couples.
—Personal exemption: Both bills eliminate the current $4,050 personal exemption.
—Tax credits: House raises per-child tax credit from $1,000 to $1,600, extends it to families earning up to $230,000. Creates a $300 tax credit for each adult in a family, which expires in 2023. Senate doubles per-child credit to $2,000. Both bills preserve the adoption tax credit, which House measure initially eliminated.
—Home mortgage interest deduction: House limits the deduction to interest paid on the first $500,000 of the loan, for new home purchases. Senate retains the current $1 million ceiling.
—Other deductions: House eliminates medical expense deductions; Senate preserves them. Senate bill ends deductions for moving expenses and tax preparation.
—State and local taxes: House ends deductions for state and local income and sales taxes, allows it for up to $10,000 in property taxes. Senate eliminates entire deduction.
—Alternative minimum tax: House, Senate both repeal the tax aimed at ensuring that higher-earning people pay at least some tax.
—Inheritance tax: Currently, when someone dies the estate owes taxes on the value of assets transferred to heirs above $5.5 million for individuals, $11 million for couples. House bill initially doubles those limits and then repeals the entire tax after 2023. Senate doubles the limits but does not repeal the tax.
—Individual insurance mandate: Senate bill repeals the requirement in President Barack Obama's health care law that people pay a tax penalty if they don't purchase health insurance. House bill does not.
—Corporate taxes: House, Senate both cut current 35 percent rate to 20 percent, but Senate has one-year delay in dropping the rate.
—Pass-through businesses: Millions of U.S. businesses "pass through" their income to individuals, who then pay personal income tax on those earnings, not corporate tax. House bill taxes many of them at 25 percent, plus creates a 9 percent rate for the first $75,000 in earnings for some smaller pass-throughs. Senate bill lets people deduct some of the earnings and then pay at their personal income tax rate on the remainder.
—Businesses: House, Senate both expand write-offs allowed for companies that buy equipment.
—Multinational corporations: House levies 10 percent tax on profits for overseas subsidiaries of U.S. corporations, and seeks to eliminate tax incentives that encourage some U.S. companies to move overseas. Senate ends tax advantages for firms moving overseas.