There are many differences in the two bills that must be reconciled before sending it to the President for his signature.
Tax Brackets
The House version has four brackets which will be permanent. The Senate version has seven brackets which all expire after 2025 and in 2026 will revert to what we now have.
Mortgage Interest Deduction
The House version permanently allows the deduction on the first $500,000 of acquisition debt, repeals deduction for equity debt. The Senate version only repeals home equity debt until 2025.
Estate Tax
The House increases threshold to $11.2 million, then repeals the tax after 2024. The Senate increases the threshold to $11.2 million until 2025.
Medical Expense Deduction
The House repeals the deductions. The Senate expands the deductions by reducing the threshold back to 7.5% of income and makes it effective for 2017.
Obama Care Mandate
Penalty for NOT having health insurance – House, no change. Senate, repeals.
Student Loan Interest Deduction
House, repeals. Senate, no change.
Alternative Minimum Tax
House, repeals. Senate increases exemption so fewer will pay, but only until 2025.
These are just a few highlights I could touch on today. There will be so many changes in the coming days it is almost futile to attempt to document them. For example, the committee in charge of reconciling the two bills could agree on a third as yet unknown outcome rather than either of the two existing proposals on any given topic.
It is important to note that almost every Senate proposal expires after 2025 and brings us right back to where we are today. It seems like a built-in safety measure in case the tax savings for big corporations are not invested in growing the economy and payrolls.
Ironically, increasing payrolls also increases payroll taxes that the government will take in. Good for everyone!
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