The U.S. Senate voted early Saturday morning to pass a tax overhaul worth just about US$1.4 trillion. The final vote was 51-49. Although the Bill is not yet finalized, the vote means that both the U.S. Senate and the U.S. House of Representatives have passed similar plans for tax reform. Negotiators from both chambers will begin meetings on Monday to agree on a single Bill that both chambers must agree on before it is sent to the President.
Biggest Tax Bill and Tax Cuts in history just passed in the Senate. Now these great Republicans will be going for final passage. Thank you to House and Senate Republicans for your hard work and commitment!
— Donald J. Trump (@realDonaldTrump) December 2, 2017
U.S. Taxpayers will be affected in the following ways:
The Senate Bill retires Federal deductions for state and local income and sales taxes, but does however, allow deductions of up to US$10,000 in local property taxes.
The Senate Bill nearly doubles the standard deduction from US$6,350 to US$12,000 for individuals and from US$12,700 to US$24,000 for couples.
The Senate Bill retains the current limit for the home mortgage interest deduction to interest paid on the first US$1 million of the loan. It also retains the deduction for medical expenses not currently covered by insurance. It has retired deductions for moving expenses and tax preparation.
The Senate Bill removes the US$4,050 personal tax exemption.
The Senate Bill reduces the seven tax brackets to 10%, 12%, 22%, 24%, 32%, 35%, and 38.5%.
The Senate Bill allows sole proprietors to deduct 23% of their earnings and pay the remainder at a personal income tax rate.
The Senate Bill cuts the corporate tax rate from 35% to 20%.
The President and the Republicans are aiming to make tax reform into law before the end of the year. Most provisions would come into effect on January 1, 2018, if this happens.
The House and Senate will vote on a motion to go to a conference on the tax bills starting Monday evening. Congress is scheduled to adjourn for the Holidays on December 15, however House Speaker Paul Ryan has stated that he will keep the House in session past that date if necessary.
The U.S. Senate vote brings the Trump Administration closer to its first major legislative victory.