What Does the Compromise Deal on GOP Tax Bill Looks Like?
House and Senate Republicans have reached a preliminary deal on the GOP tax bill (also known as the Tax Cuts and Jobs Act) on Wednesday. The new bill will reduce the corporate tax rate from 35% to 21% starting in 2018. Both House and Senate provisions had proposed a 20% corporate tax rate, but it was raised to 21% to allow for a lower top individual tax rate to be in place as well, dropping from 39.6% to 37% (the Senate version had it at 38.5%).
Pass-through businesses, like Partnerships, LLCs and S-corps, would receive a 20% deduction on their income.
Mortgage interest deduction will be capped at $750,000 instead of $1 million. The House provision proposed $500,000 while the Senate left it unchanged. It is unclear, at the moment, whether the new bill will grandfather existing mortgages as the House's provision proposed, or eliminate the deduction for equity interest as the Senate bill stated.
The estate tax is also mentioned in the compromise bill. Rather than phasing it out over time as the House proposed, the threshold for an estate to qualify, which is currently at 5.6 million, would be raised to about $11 million. This is the same as the Senate proposed.
The newest provision would also repeal the corporate alternative minimum (ATM) tax.
It's important to note that the bill is currently in a conference committee to eliminate some conflicting clauses between the House and Senate versions. So, the final bill may have remarkable adjustments.