Senior Loan Officer | NMLS #316198
Branch NMLS #1270689
Posted On December 05, 2017
Early Saturday morning, the Senate passed its version of major tax overhaul. Changes to the bill came down to the wire, with some adjustments getting handwritten in margins on the 479-page document. Now that the House of Representatives and Senate have each approved their versions of the tax reform bill, the next step is to go to a conference committee to finalize one version to send forward to President Trump.
While the Senate and House bills each have some similarities, there will be differences that need to be ironed out. Both bills drop most state and local tax deductions, increase the child tax credit, and raise the standard deduction. However, unlike the Senate bill, the House bill curbs mortgage interest deduction, cuts corporate taxes immediately, reduces the number of individual tax brackets, and lowers the “pass through” rate, or sets a top rate of 25% for business income that is passed through to individual tax returns. The House bill also would apply a permanent change to expensing rules, repeal the estate tax, repeal the Alternative Minimum tax, and tax graduate student income. On the other side, the Senate bill maintains the medical expenses deduction, but repeals the health care mandate.
On Monday night, the House voted to go to conference committee on the tax bill. House Speaker Paul Ryan, R-Wisconsin, and House Minority Leader Nancy Pelosi, D-California each announced their choices as conferees to represent their respective parties. The Senate is expected to vote to go to conference soon.
Congress is on an urgent timeline to pass this legislation, as the government faces a possible shutdown as early as this week, with funding set to expire and a new long-term spending package not yet been agreed upon. House Republicans are proposing a temporary solution, a stopgap bill to keep the government open through the next two weeks, in an effort to keep tax reform on track. If passed, the government would remain open through Friday, December 22nd. Senate Majority Leader Mitch McConnell has said the shutdown is, “not going to happen.”