As you may have heard, Congressional Republicans did reach a deal on a final tax reform bill yesterday. The House and Senate were to hold a conference committee meeting that included representatives from both sides to work through the differences between the two bills, creating one tax reform bill that would be voted on again and sent to the President, if passed. The first official conference committee meeting was yesterday, but it seems the deal was already done before then. Full details of the bill have yet to come out, but a few of the publicized differences agreed on to create the final bill include:
- Corporate flat tax rate of 21% likely starting in 2018 (rather than 20% proposed potentially starting in 2019, and current top rate of 35%)
- Top individual rate of 37% (from the current 39.6%)
- 20% deduction for pass-through businesses (similar to Senate version, but less than the 23% proposed)
- Potentially an election to deduct up to $10k of either property or state taxes as an itemized deduction
- Cap mortgage interest deduction principal loan balance at $750k (current $1M, House capped at $500k, Senate left at $1M)
- Repeal of corporate AMT (Senate added that back in as a last minute amendment in their version, causing big debate)
- Retain Estate tax, but double the exemption
- Did NOT include the graduate student tax, which was to tax waivers for grad students as ordinary income (currently does not)
- Did keep the Obamacare repeal of the individual mandate
- Itemized medical deductions will likely stay intact, as well as the student loan interest deduction (both were on the chopping block)
It has been speculated that full details may come out as early as tomorrow, however, congressional scorekeepers like the Joint Committee on Taxation still need to evaluate to ensure the bill does not go over budget. If all goes as planned, a vote by both House and Senate on the combined bill could be as early as next week. This means there is a chance final tax reform legislation will be finalized by year end.
I will keep you posted as more details become available, please let me know if you have any questions!