11-17-2017, 03:08 PM
Here are the key differences between the two chambers of Congress in some more detail.
State and local taxes
The Senate bill will entirely repeal the deduction for state and local taxes, making no exception for property taxes.
The House bill, in a bid to win support from moderate Republicans, would allow deductions up to $10,000 for property taxes.
Senate Republicans see little need to allow property tax deductions, as they don’t have members in their conference from high-tax states such as California, New York, New Jersey and Illinois.
Home mortgage interest deduction
The Senate would keep in place the deduction for newly purchased homes up to $1 million while the House plan would cut the threshold to $500,000.
The House Ways and Means Committee added the lower cap on mortgage interest deductions as a last-minute revenue raiser and it drew strong opposition from the National Association of Home Builders, a powerful special interest group.
Sen. Tim Scott (R-S.C.), a member of the Finance Committee, pushed to raise the limit, arguing that homes priced between $500,000 and $1 million are average in high-income areas such as San Francisco, New York and the District of Columbia. (Thank you Tim!)
Popular tax credits and deductions
The Senate would keep in place a variety of popular tax credits and deductions that would have been eliminated by the House tax bill released last week.
It preserves tax credits and deductions for adoption, medical expense, teacher expenses and student loan interest.
“We stayed kind of inside the big structural issues,” said a Senate Finance Committee aide.
The House Ways and Means Committee on Thursday adopted an amendment to restore the adoption tax credit.
The Senate bill would also raise the income limit for the child credit. In the Senate bill, the child tax credit starts to phase out at $1 million of income for married couples, compared to $230,000 in the House bill. The credit is increased to $1,650 in the Senate bill and $1,600 in the House bill.
Tax brackets
The House bill would condense the number of tax brackets to four: 12 percent for income up to $90,000; 25 percent for income up to $260,000; 35 percent for income up to $1 million; and 39.6 percent for income over $1 million.
The Senate bill would establish seven tax brackets at 10 percent, 12 percent, 22.5 percent, 25 percent, 32.5 percent, 35 percent and 38.5 percent for the nation’s highest income earners.
The top rate kicks in for individuals who earn $500,000 and couples who earn $1 million.
Senate Republicans said they were concerned about the optics of changing the 10 percent bracket to 12 percent while cutting the corporate tax rate, even though low-income earners would be covered by the doubling of the standard deduction in both bills.
(continued)
State and local taxes
The Senate bill will entirely repeal the deduction for state and local taxes, making no exception for property taxes.
The House bill, in a bid to win support from moderate Republicans, would allow deductions up to $10,000 for property taxes.
Senate Republicans see little need to allow property tax deductions, as they don’t have members in their conference from high-tax states such as California, New York, New Jersey and Illinois.
Home mortgage interest deduction
The Senate would keep in place the deduction for newly purchased homes up to $1 million while the House plan would cut the threshold to $500,000.
The House Ways and Means Committee added the lower cap on mortgage interest deductions as a last-minute revenue raiser and it drew strong opposition from the National Association of Home Builders, a powerful special interest group.
Sen. Tim Scott (R-S.C.), a member of the Finance Committee, pushed to raise the limit, arguing that homes priced between $500,000 and $1 million are average in high-income areas such as San Francisco, New York and the District of Columbia. (Thank you Tim!)
Popular tax credits and deductions
The Senate would keep in place a variety of popular tax credits and deductions that would have been eliminated by the House tax bill released last week.
It preserves tax credits and deductions for adoption, medical expense, teacher expenses and student loan interest.
“We stayed kind of inside the big structural issues,” said a Senate Finance Committee aide.
The House Ways and Means Committee on Thursday adopted an amendment to restore the adoption tax credit.
The Senate bill would also raise the income limit for the child credit. In the Senate bill, the child tax credit starts to phase out at $1 million of income for married couples, compared to $230,000 in the House bill. The credit is increased to $1,650 in the Senate bill and $1,600 in the House bill.
Tax brackets
The House bill would condense the number of tax brackets to four: 12 percent for income up to $90,000; 25 percent for income up to $260,000; 35 percent for income up to $1 million; and 39.6 percent for income over $1 million.
The Senate bill would establish seven tax brackets at 10 percent, 12 percent, 22.5 percent, 25 percent, 32.5 percent, 35 percent and 38.5 percent for the nation’s highest income earners.
The top rate kicks in for individuals who earn $500,000 and couples who earn $1 million.
Senate Republicans said they were concerned about the optics of changing the 10 percent bracket to 12 percent while cutting the corporate tax rate, even though low-income earners would be covered by the doubling of the standard deduction in both bills.
(continued)