The Senate voted Saturday, December 2nd to approve a tax reform bill, following a voting session that lasted well into the early morning hours. The final Senate bill differs on a number of key provisions from the House tax bill passed in mid-November. These differences must now be reconciled and a final piece of legislation voted on by both chambers before sending to the President for signature.
The Senate bill language was officially released shortly before the vote, giving many senators – and the public – little time to examine the final details. Our team at GBQ is taking a “divide and conquer” approach to dissecting the legislation, with team members digging into the details of all provisions in order to deliver our best and most comprehensive advice to clients as soon as possible.
The Senate bill permanently lowers the corporate tax rate from 35 percent to 20 percent, effective in 2019. Tax rates will also be cut for individuals, though those cuts will expire after a decade. The Senate bill keeps the same number of individual tax brackets, although it changes the rates in those brackets. The Senate bill also repeals the individual mandate under the Affordable Care Act, whereas the House version does not. The Senate bill, like the House bill, limits state and local income tax deductions to property taxes, with a cap of $10,000.
This is the most significant tax legislation since 1986. Everyone – corporations, passthrough entities, individuals and tax-exempt organizations – will be affected. As more detailed information becomes available in the coming days, GBQ will be reading, analyzing and communicating with our clients via electronic Tax Alerts and personal conversations. Should you have immediate questions, please contact your GBQ tax professional.