The Senate voted early Wednesday to approve a sweeping tax-reform bill. Because of a procedural error, the House, which had approved the measure earlier this month, will have to re-vote on the bill. It’s expected to be signed later this week by President Trump.
Here are the highlights:
Corporate taxes: Cuts the current 35-percent rate to 21 percent beginning January 1.
Pass-through businesses: The bill lets so-called “pass-through” businesses deduct 20 percent of the first $315,000 of earnings. In 2014, about 95 percent of the 26 million businesses in the U.S. were pass-throughs, according to the Brookings Institution. They’re called that because the income they generate “passes through” to their owners, who are then taxed under the individual income tax system.
Business investment: Companies can immediately write off the full cost of new equipment.
Multinational corporations: Companies moving overseas will lose certain tax advantages.
Mortgage interest deduction: It will be limited to the interest paid on the first $750,000 of a new loan for a first or second home. Currently, the limit is $1 million.
State and local taxes: Keep the itemized deduction for these but only up to $10,000. This deduction is important to homeowners.
Individual mandate: Repeals the requirement in Obamacare that forced people pay a penalty if they don’t buy health insurance.
Inheritance tax: Doubles the limits on assets transferred to heirs to $11 million for individuals, $22 million for couples. However, this provision will be going away in 2025.