Republicans released the final version of the tax reform plan reconciled between the House and Senate on Friday.
— The Hill (@thehill) December 15, 2017
In the final version of the bill,
…the top individual rate would be lowered from 39.6 percent to 37 percent, which is lower than the top rate in the original bills passed by the House and Senate. The corporate tax rate would be cut from 35 percent to 21 percent, up from 20 percent in the original bills.
The measure has seven individual tax brackets, and like both the House and Senate bills, substantially increases the standard deduction.
It also increases the child tax credit from $1,000 to $2,000, as the Senate bill did, and increases the maximum amount that is refundable to $1,400, up from $1,100 in the original Senate measure. The latter change was made to secure Rubio’s vote.
The legislation preserves the deductions for mortgage interest and charitable giving, though it lowers the cap on the mortgage deduction from $1 million to $750,000.
Seeking to win over House Republicans from high-tax states, the conference committee legislation caps the state and local tax deduction at $10,000, with filers allowed to deduct property taxes and state and local income and sales taxes.
Several popular tax preferences that were eliminated in the House bill are preserved. They include the deduction for medical expenses, the deduction for student-loan interest, the exclusion for graduate students’ tuition waivers and the ability to issue tax-exempt private-activity bonds.
The bill does not repeal the estate tax or the alternative minimum tax for individuals, both long-time goals for Republicans, but it does increase the exemption amounts. The corporate alternative minimum tax, which was retained in the Senate bill, is eliminated, a change that is certain to please the business community.
The final bill provides tax relief to pass-through businesses — entities such as small businesses whose income is taxed through the individual code — through a 20-percent deduction. The first $75,000 of pass-through income would be subject to an 8 percent rate.
The tax reform bill is a must-have if Republicans want to have any big legislative achievements to point to during the 2018 midterms. The bill is on track to pass both houses of Congress next week and onto President Trump’s desk.