Tax Bill Update #2 (December 2017)

The Senate passed their version of the tax bill late Friday night. If you missed the details of the bill, below are some of the major differences with the House bill that passed last month.

(And if you missed the update on the House Tax Bill Proposal, click here to read that one first.)
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	House Proposal	Senate Proposal
Brackets	4	7
Top Individual Rate	39.6%	38.5%
Corporate Rate & Start Date	20%, in 2018	20%, in 2019
Alternative Minimum Tax	Repeals	Retains
Flow-through Income	Max 25% rate	23% Deduction
Medical Expense Deduction	Eliminates	Preserves Temporarily
Student Loan Interest	Eliminates	Preserves
Obamacare	No Changes	Individual Mandate Repeal

 

The main things that stand out to me with the Senate bill is the different treatment of flow through businesses (think S-Corps and partnerships), the retention of the AMT, and the addition of Obamacare mandate repeal.

We'll see what actually comes out of the House and Senate reconciliation process before we dig too deep into the details but, as others have said, this bill is more about tax cuts than tax reform and very different from the last tax reform bill delivered by the Reagan administration in 1986.

There are some very good things in the bill(s), and some simplifications, but overall this is written to be a major tax cut (especially to corporate rates) and written, first and foremost, in an attempt to drive the economy forward.

The administration would like to have a bill signed by Christmas, and at this point it's hard to see a way the GOP won't come up with some agreement between the two bills.

Please feel free to reach out if you have any specific questions or concerns about how the final bill may relate to your personal tax situation.
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This is general information and a brief summarization of complicated tax issues which are often subject to many exclusions and limitations. We make every effort to verify the accuracy of all information but we do not guarantee or warranty advice disseminated over the internet. Please give us a call to discuss potential strategies and ensure they make sense for your specific situation.