Griff Jenkins reports from Washington, D.C.
The House passed its tax reform legislation Thursday afternoon, and the Senate moved its bill out of committee later in the evening.
The House legislation passed, 227 to 205, along party lines, which would bring the biggest revamp of the U.S. tax system in three decades. Thirteen Republicans voted against the measure, including House Appropriations Committee chairman Rodney Frelinghuysen of New Jersey.
The Senate’s tax overhaul is slightly different from that of the House version and includes a repeal of the Affordable Care Act’s requirement to buy insurance. It would also sunset certain individual tax changes after a few years.
The Senate Finance Committee approved along party lines its $1.5 trillion tax overhaul plan Thursday as well, sending it to the full Senate for a vote.
"Now the ball is in the Senate's court," Vice President Mike Pence said after the House vote. "The next few weeks are going to be vitally important and they're going to be a challenge."
Here’s a look at how the House and Senate versions of tax reform compare – and what’s at stake for your taxes.
State and local deductions
After the tax reform framework was revealed last month, some lawmakers grumbled about a provision that would eliminate state and local tax deductions – meaning taxpayers in high-taxed states would lose a write-off. This impacted mostly blue states, such as California and New York.>Video
The latest House plan ditches a full repeal of the deductions, called SALT, and instead leaves in place state and local property tax deductions up to $10,000. However, other deductions – such as income and sales tax – would be eliminated.
“I view the elimination of the deduction as a geographic redistribution of wealth, picking winners and losers,” Rep. Lee Zeldin, R-N.Y., has said.
Repealing the individual mandate
The Senate repealed the ObamaCare mandate in its latest version of its tax reform legislation.
This move is expected to add an additional $338 billion in revenue over 10 years. Congressional Republicans failed to repeal ObamaCare earlier this year.
The corporate tax rate would be lowered to 20 percent from 35 percent.
The Senate plan would make the change permanent but delay its implementation for a year.
The House plan would drastically reduce the cap on the popular deduction to interest on mortgages to $500,000 for newly purchased homes from the current cap at $1.1 million.
The Senate capped it at $1 million.
Child tax credit
The child tax credit is raised to $2,000 from $1,000 in the Senate’s latest plan.
The House plan had been criticized for not raising it enough.
The legislation eliminates the Alternative Minimum Tax, a supplemental tax meant to offset benefits a person with a high income could receive.>Video
However, the Senate’s plan would expire that repeal at the end of 2025.
Republicans also want to phase out the so-called estate tax – sometimes referred to as a “death tax” by opponents. The federal estate tax generally affects wealthier Americans because it is only levied on a portion of an estate value transferred after death that exceeds a certain exemption level, according to the Center on Budget and Policy Priorities.
The plan doubles the standard deduction used by more Americans.
The Senate bill increases the standard deduction – which reduces the amount Americans are taxed – to $12,000 for individuals. It also raises it to $24,000 for married couples.
The Senate’s bill includes additional relief for "pass-through" businesses. Millions of American businesses use this format, where their profits are counted in the owners' personal tax returns.
The House bill taxes many of them at a maximum 25 percent, down from 39.6 percent currently, and adds a lower minimum rate.
The Senate version would set a new 17.4 percent deduction for "pass-through" income, aimed to help smaller businesses. It would also make it easier for taxpayers to fully benefit from the 17.4 tax deduction.
The legislation aims to simplify how Americans file their taxes. The filing system would be able to be completed on a postcard with just 15 lines for most Americans.
The House plan shrinks the number of tax brackets from seven to four, with respective tax rates of 12 percent, 25 percent, 35 percent and 39.6 percent.
“This is the beginning of the end of this horrible tax code in America,” Rep. Kevin Brady, R-Texas, told Fox News.
The Senate measure keeps the current number of personal income tax brackets, seven, though it changes the rates to 10, 12, 22.5, 25, 32.5, 35 and 38.5 percent. That last top bracket for the wealthiest earners carries a higher rate of 39.6 percent under current law.
The House bill goes further toward simplifying the tax system. It shrinks the number of brackets from seven to four, with rates of 12, 25, 35 and 39.6 percent.
Fox News’ Chad Pergram and Barnini Chakraborty contributed to this report. The Associated Press also contributed to this report.
Kaitlyn Schallhorn is a Reporter for Fox News. Follow her on Twitter @K_Schallhorn.
Source : http://www.foxnews.com/politics/2017/11/17/house-passes-gop-tax-reform-bill-how-does-senates-version-compare.html