Details of an agreement among House and Senate Republicans emerged Wednesday—including rate cuts for corporations, individuals, and pass-through businesses. Here's what tax negotiators have agreed to, according to lawmakers—and how the new plan differs from bills that passed both chambers earlier:
Corporate Rate
Joint Agreement: Cut the corporate rate to 21% from 35% beginning in 2018. House: Cut to 20% in 2018. Senate: Cut to 20% in 2019.
Top Individual Rate
Joint Agreement: Cut the top rate to 37% for the highest earners, down from 39.6%. House: Leave top rate at 39.6%. Senate: Cut top rate to 38.5%.
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Pass-Through Tax Breaks
Joint Agreement: Provide a 20% deduction on pass-through business income, and extend that break to trusts as well as individuals. House: Tax such business income at a top rate of 25%, but service businesses like accounting and law firms wouldn't be eligible. Provide a lower rate of 9% for some lesser-earning businesses. Senate: Provide a 23% deduction, with limitations related to taxable income and amount of wages paid.
Corporate Alternative Minimum Tax
Joint Agreement: Repeal it. House: Repeal it. Senate: Maintain it.
Obamacare Individual Mandate
Joint Agreement: Repeal it. House: No action. Senate: Repeal it by zeroing out the tax penalty for individuals who don't purchase health insurance.
Mortgage Interest Deduction
Joint Agreement: Cap it at loans of $750,000—down from $1 million—for new purchases of homes. House: Cap it at loans of $500,000. Senate: No change.
In addition, tax writers plan the following change, according to people familiar with the discussions:
Individual State and Local Tax Deductions
Joint Agreement: Limit combined deductions for state and local income taxes and property taxes to $10,000. House: Repeal deduction except for property taxes, capped at $10,000. Senate: Repeal deduction except for property taxes, capped at $10,000.
From: Bloomberg
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