The Senate adopted several significant changes to the Finance Committee bill in order to secure sufficient votes to pass the legislation. The changes to the Finance Committee bill that were adopted by the Senate include: an increase of the proposed 17.4 percent deduction for certain pass-through business income to 23 percent and an additional $10,000 deduction for individual state and local property taxes. To offset part of the cost of these provisions, the Senate agreed to increase the tax rates for the mandatory repatriation toll tax to 14.49 percent for cash or cash-equivalents and 7.49 percent for illiquid assets (slightly higher percentages than in the House-passed bill). The Senate maintains the current corporate alternative minimum tax (AMT) but increases the individual AMT exemption amounts.
Although similar in overall structure, the amended Senate tax reform bill differs in key details from the ‘Tax Cuts and Jobs Act’ approved on 16 November by the House of Representatives. A House and Senate conference committee is expected to start work this week on resolving the differences in the two versions of tax reform legislation.