What’s in the Senate Tax Bill and What’s Next?
The Senate recently passed a tax reform bill. Here are some of the key provisions it contains:
The Senate bill changes the rates on taxable income to:
10% (income up to $9,525 for individuals; up to $19,050 for married couples filing jointly)
12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
22% (over $38,700 to $70,000; over $77,400 to $140,000 for couples)
24% (over $70,000 to $160,000; over $140,000 to $320,000 for couples)
32% (over $160,000 to $200,000; over $320,000 to $400,000 for couples)
35% (over $200,000 to $500,000; over $400,000 to $1 million for couples)
38.5% (over $500,000; over $1 million for couples)
Eliminates the personal tax exemption of $4,050.
Nearly doubles the standard deduction to $12,000 for single filers and $24,000 for married couples filing jointly.
Eliminates state and income tax deduction.
Caps property tax deduction at $10,000.
Retains mortgage interest as deductible up to a debt cap of $1 million.
Doubles the child tax credit from $1,000 per child to $2,000, but the additional $1,000 is not refundable.
Retains the Alternative Minimum Tax, but it will apply to higher earners.
Allows teachers to deduct $500 of self-purchased supplies rather than $250.
Allows itemizers to deduct medical and dental expenses if they exceed 7.5% of adjusted gross income in 2017 and 2018 (lowered from 10%).
Removes the mandate to buy individual health insurance.
The Senate bill cuts the corporate tax rate to 20% beginning in 2019.
Companies would be required to pay a one-time tax on existing overseas profits (14.5% on cash assets and 7.5% on non-cash assets).
What’s next for the tax reform bill?
The House and the Senate each passed their own version of a tax reform bill. They must both pass an identical version before it can be presented to President Trump for his signature.
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