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Comparing the House and Senate Tax Plans Summary of the Tax Cuts and Jobs Act (H.R.1)

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On November 2, 2017, the House Ways and Means Committee released their comprehensive tax reform proposal, Tax Cuts and Jobs Act (H.R. 1). On November 9, the Senate Finance Committee unveiled their own tax proposal. It is widely expeceted that both bills will be considerably amended as they go through the legislative process.

Although there will be a lot of discussion and changes to the tax proposals, here is what we know so far:

IREM's Priority Issues:

  • The House and Senate proposal eliminates the 1031 Like Kind Exchange for personal property, BUT it has been preserved for real estate. IREM has been urging Members of Congress to retain this tax treatment for many years, and we are pleased to see the 1031 Like Kind Exchange remain for real estate.
  • Carried Interest has been retained, however a three-year hold period would be required to qualify.
  • The Section 179D Deduction for Energy Efficient Commercial Buildings was not addressed by either bill. Currently, it is set to remain expired as of December 31, 2016. IREM is part of a coalition of industry stakeholders fighting to extend and strengthen the 179D deduction. IREM signed onto a letter urging members of the House to support the deduction, and will continue urging the Senate to do the same.
Other Provisions Affecting Businesses
Provision: Current House Bill (H.R. 1) Senate Plan
Corporate Rate 35% 20% effective 2018 20% effective 2019
Pass-through Businesses Taxed same as income. (Top marginal rate: 39.6%) 70% of income taxed as wages; 30% taxed as business income (25%). Ratio can be adjusted based on capital investment. 17.4% deduction for non-wage income, but only if taxable income is below $75,000. ($150,000 for couples)
Other Provisions Affecting Individuals
Deduction: Current House Bill (HR. 1) Senate Plan
State & Local Tax Deduction Deduction for sales, income, and property tax Property tax - Capped at  $10,000. Sales and income tax would be elminated. Elminates state and local tax income and property deductions for individuals
Mortgage Interest Deduction $1 million cap $500,000 cap Keeps the deduction at $1 million
Standard Deduction Individuals: $6,350 Couples: $12,700 Individuals: $12,000 Couples: $24,000 Same as House Bill