House and Senate Reach Compromise on Tax Reform
posted Dec 14, 2017 by Norman LeBlanc, CPA in the Global Tax Blog
Yesterday House and Senate Republicans struck a tentative deal on a tax bill, joining together their respective bills in the next step to overhaul the U.S. tax system. We expect the text of the bill to be released on Friday, with votes in the House and Senate taking place next week. In the meantime, we wanted to provide you with an overview of what’s included in the combined bill.
What is included in the compromise bill?
The bill language is not yet available, but the Conference Committee (a temporary, ad hoc panel composed of House and Senate conferees which is formed for the purpose of reconciling differences in legislation that has passed both chambers) has released a few agreed-to provisions in the tentative deal. Here’s what we know:
- The corporate tax rate would be set at 21% for tax years beginning in 2018 (as opposed to the current 35% rate, and previously proposed 20% rate)
- The highest individual tax rate would be reduced to 37% (from 39.6%)
- Mortgage interest would be deductible based on indebtedness up to $750,000 (the midpoint between the House’s proposal of $500,000 and the Senate’s plan to maintain the $1 million cap which is currently in place).
- Though the lifetime exemption is expected to increase to around $11 million in the New Year, the estate tax will remain in place as is (the House had proposed a future repeal of this tax).
- Alternative Minimum Tax, or AMT for corporations will be repealed (matching the House’s proposal). The individual AMT will remain in place, but threshold amounts will increase.
As more information develops in Washington, of course we will keep you updated. Once the official bill has been passed, we will provide you with a complete overview of the changes in our webinar (date to be announced).
For further information or any questions, please contact us.