United States

House and Senate tax bills differ on major items

TAX ALERT  | 

The House and Senate are headed towards a conference or other mechanism to reconcile their competing visions for tax reform. The House bill has passed the full House, and the Senate bill has been approved by the Senate Finance Committee, with further amendments possible on the Senate floor. As it stands now, here are the major differences–in terms of politics and revenue considerations–between the House bill and the plan approved on a conceptual level by the Senate Finance Committee. Note that in addition to the possibility of Senate floor amendments, the actual legislative text of the concepts approved by the Senate Finance Committee is not yet available.

  • Health care individual mandate–Senate repeals this controversial provision of the Affordable Care Act, while House is silent, but probably agrees with the policy. But some Senators may disagree with the idea of repealing the mandate as part of this bill, without other changes to the Affordable Care Act
  • State and local taxes–Senate repeals individual (non-business) deduction entirely, while House preserves individual deductions for up to $10,000 of property taxes.
  • Corporate rate reduction–House lowers rate to 20 percent immediately, Senate defers until 2019
  • Pass-through rate reduction–very different approaches both to the magnitude of reduction and eligibility for the benefits
  • Repatriation taxes–House tax rates are higher than Senate. Different ‘anti-abuse’ rules for future offshore income
  • Individual tax brackets and rates–four brackets in House bill, seven in Senate. Senate individual rate cuts are not permanent
  • Mortgage interest–House bill curbs deductions on future mortgages to interest on $500,000. Senate preserves current law, but eliminates deductions for home-equity loans
  • Estate tax–House bill would first double the exemption for the estate tax and then repeal the tax in six years, while the Senate bill would increase the exemption and not repeal the tax in its entirety

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