After holding a public meeting on Wednesday, December 13th, the Conference Committee appointed by the House and the Senate to reconcile the two versions of tax reform bills released one, identical bill to be introduced in both Houses of Congress.
The bill initially passed the House of Representatives on Tuesday, December 19th with a vote of 227 to 203. However, due to Senate procedural rules, the bill required additional amendments. Early in the morning on Wednesday December 20th, the amended bill passed the Senate on a 51/48 vote margin. The changes to the bill in the Senate include changes to the bill’s name, changes to the tax treatment of certain education savings plans and changes to an excise tax on certain universities. The House voted again on Wednesday, December 20th and passed the amended bill with a vote of 224-201.
The President’s Signature
The bill will now be presented to President Trump to sign into law. According to budgetary “pay-as-you-go” rules if the bill is signed in 2017, the rule will activate mandatory sequester of select government programs. However, if the President signs the bill in 2018, the pay-go sequester will not take effect until 2019 . As a result, the President may not sign the bill until 2018 to avoid the mandatory sequester of programs.
Despite this pay-as-you-go hurdle, the President is expected to sign the bill. When signed into law, this will be the largest piece of Federal tax legislation in over 30 years.
Included in the Bill are several changes to individual and corporate taxation including:
- Lowers the corporate tax rate from 35% down to 21% effective January 1, 2018
- Lowers the top individual tax bracket to 37% from 39.6%
- Allows but limits the amount that individuals may claim as a deduction for state and local taxes
- Allows businesses to fully expense certain depreciable assets in the year purchased
- Provides sole-proprietors and pass-through businesses a deduction for a portion of their trade or business income, subject to limitations.
Once signed into law, a full analysis of the Bill will be published.
Paul Morrow, Manager | Tax
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