The US Senate [official website] on Wednesday voted 51-48 along party lines to approve a slightly modified version of the conference committee version [text] of the Tax Cuts and Jobs Act [H.R. 1 materials].
The bill underwent minor changes between Wednesday afternoon’s passage [JURIST report] by the US House of Representatives [official website] after the Senate Parliamentarian struck three provisions [JURIST report] under the Byrd Rule [materials]. That procedural rule governs the content of bills that may be passed through reconciliation, and thus require only a majority of approval in both houses.As a result, the version passed by the Senate is slightly different than that passed in the House earlier today. Because both houses must pass an identical bill before the President can sign it into law, this means that the House will have to vote on the bill again tomorrow, with the offending provisions stricken.
Because the substance of the bill remains largely the same as the version passed by the House, allow us to quote ourselves:
Among the changes the bill would make are the the reduction of the corporate income tax rate from 35% to 21%, and the setting of marginal income tax rates at 10%, 12%, 22%, 24%, 32%, 35% and 37%, with accompanying changes in the income brackets to which those rates apply. Notably, the top marginal tax rate doesn’t kick in until $500,000 individuals and $600,000 for those who file jointly, an increase in the thresholds of $418,400 and $470,700, respectively, under current law.
The conference bill also raises the child tax credit from $1,000 per child in 2017 to $2,000 per child and makes up to $1,400 of the credit refundable. For slightly different kinds of families, the current estate tax exemption of $5 million per individual and $10 million per couple were more than doubled to $11 million per individual and $22 million per couple.
Many of the more controversial aspects of the earlier bills did not survive the committee process. Student loan interest will still be deductible, teachers can still benefit from a $250 credit for classroom supplies,children must still be born to benefit from 529 savings accounts and certain medical expenses remain deductible as under the current code.
The bill also makes changes to the carried interest deduction [Tax Policy Center materials], requiring that assets be held for three years as opposed to one year under current law in order to benefit from the preferential 23.8% tax rate.
Apart from these changes to taxation directly, the bill will also effectively repeal the individual mandate provision of the Patient Protection and Affordable Care Act (ACA) [text], which currently imposes a $695 tax penalty on filers who don’t have minimum insurance coverage. Although the penalty remains technically in effect, the amount of the penalty is set at $0. This method of repeal closely mirrors the Supreme Court’s 2012 decision finding the individual mandate constitutional because it is a tax [JURIST report].
The House is expected to vote on the version passed by the Senate early tomorrow morning.