House GOP Unveils Sweeping Tax Reform Bill; Senate’s Version Expected Next Week

House Republicans yesterday, November 2, unveiled their much-anticipated tax reform legislation, the Tax Cuts and Jobs Act (HR 1). The 429-page bill represents the House Ways and Means Committee’s first legislative offer to significantly overhaul the U.S. Tax Code.

Bill Highlights

The bill loosely follows the unified framework released by the House, Senate and Trump Administration in September.  Trump said he wants to see a bill on his desk by Thanksgiving. The following is a brief highlight of the House Bill.


On the individual side of the tax code, the Tax Cuts and Jobs Act proposes to do the following:

  • Lower the individual tax rates for low-to-middle income taxpayers to 12, 25, and 35 percent. For joint returns, the 25 percent would start at $90,000; and at $260,000 for the 35 percent bracket (half for single, individual filers). The bill would maintain the current 39.6 percent tax rate for joint filers with taxable income of more than $1 million ($500,000 for individuals);
  • Increase the standard deduction from $6,350 to $12,200 for individuals and $12,700 to $24,400 for married couples;
  • Aim to simplify the tax code and filing process by eliminating “special-interest deductions;”
  • Establish a new Family Credit, which includes expanding the Child Tax Credit from $1,000 to $1,600, and providing a credit of $300 for each parent and nonchild dependent to help all families;
  • Eliminate personal exemptions;
  • Preserve the Earned Income Tax Credit;
  • Continue the deduction for charitable contributions for those who itemize;
  • Grandfather in the home mortgage interest deduction for existing mortgages up to the current $1 million debt limit but lower the limit going forward for the home mortgage interest deduction on newly purchased homes up to $500,000;
  • Continue to allow itemized state and local property taxes deduction but only up to $10,000;
  • Eliminates the current itemized deduction for state and local taxes;
  • Retain popular retirement savings options such as 401(k)s and Individual Retirement Accounts as they are currently structured;
  • Repeals the alternative minimum tax (AMT); and
  • Double the estate tax exclusion, with full repeal after six year.


On the business side of tax reform, the Tax Cuts and Jobs Act would, among other things, includes proposals to:

  • Cut the corporate tax rate to 20 percent;
  • Create a top passthrough rate of 25 percent on small business income with safeguards against abuse;
  • Create a temporary 100 percent expensing write-off for qualified business property;
  • Make numerous changes to the taxation of foreign income and foreign persons/ businesses;
  • Cap the deduction for net interest expenses at 30 percent of adjusted taxable income, except for small businesses;
  • Modify the net operating loss deduction; and
  • Allow for the temporary repatriation of foreign earnings at a 12 percent rate (5 percent for noncash holdings).

Hill Reaction

House Republicans have not yet reached consensus on the proposals within the bill, and GOP House leaders can only afford to lose 22 votes on the measure if the bill receives no Democratic support. Much of the immediate backlash within the Party centers on the elimination of the State and Local Tax (SALT) deduction in its current form, while capping the current property tax deduction at $10,000.

Mark-Up Scheduled

The House Ways and Means Committee has scheduled a markup of the Tax Cuts and Jobs Act to begin on November 6 at 12 PM. The markup is likely to last more than one day, and amendments to the bill are expected. A Congressional Budget Office (CBO) score of the legislation is forthcoming but had not yet been released.

Senate Action

Across the U.S. Capitol, the Senate Finance Committee is reportedly still planning to unveil its own tax reform bill on November 8. 

As a premier boutique tax firm, we are excited about the prospects of this landmark tax reform bill. We are working hard to make sure our clients are well informed about the legislation along with the impact on their specific situation. As we continue to track this legislation, we are developing strategies designed to leverage the litigation once passed. If you have any questions regarding tax reform, this bill or the specific impact on your situation, please do not hesitate to contact us.

This entry was posted in Blog. Bookmark the permalink.

Comments are closed.