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Conference Committee Releases Text of Final Version of Tax Bill

(Parker Tax Publishing December 16, 2017)

On Friday, December 15, the members of the conference committee reconciling the House and Senate versions ("House Bill" and "Senate Bill", respectively) of the Tax Cuts and Jobs Act (TCJA) formally approved a conference report, effectively clearing the way for votes on the final bill in the House and Senate next week. The conference report includes the final legislative text for the bill and the Joint Committee of Taxation's explanation of its provisions. H.R. 1-Conference (12/15/2017).

Note: This is a PREVIEW of the December 18 special issue of Parker's Federal Tax Bulletin. The full issue with an in-depth explanation of the final legislative text of the Tax Cuts and Jobs Act will be emailed to subscribers and posted to the Parker Tax Pro Library site on Monday afternoon.

The final bill closely resembles the one that passed the Senate on December 2. The most significant differences between the final bill in the conference report and the Senate Bill include:

(1) A top individual tax rate of 37 percent (compared with a 39.6 percent rate in the House Bill and a 38.5 percent rate in the Senate Bill);

(2) A top corporate rate of 21 percent (compared with a rate of 20 percent in both the House and Senate Bills);

(3) Full repeal of the corporate alternative minimum tax (AMT) (adopts provision from the House Bill; the Senate Bill had retained the corporate AMT);

(4) A 20 percent deduction against qualified business income from passthrough business entities (compared with a 23 percent deduction in the Senate Bill, from which the provision is derived) and changes to the rules for calculating "qualified business income" (moving them closer to some of the provisions in the House Bill);

(5) A provision allowing taxpayers to aggregate (1) state and local property taxes, and (2) state and local income taxes (or sales taxes in lieu of income taxes) toward a maximum $10,000 itemized deduction for state and local taxes (the House and Senate Bills allowed for only the deduction of property taxes up to the limit);

(6) A lowered $750,000 limit on the loan amount for which a mortgage interest deduction can be claimed by individuals, with existing loans grandfathered (splits the difference between the House and Senate Bills; the limit under present law is $1 million);

(7) Retention of individual AMT with an exclusion of $1 million for joint filers and $500,000 for all others (the House Bill repealed the individual AMT; the Senate Bill retained it with far less generous increases to the AMT exemption amounts);

(8) An increase in the refundable portion of the child tax credit to $1,400 and no change to the current maximum age of 16 for eligibility for the credit (the maximum refundable portion was $1,100 in the House and Senate Bills, and the maximum age was 17).

The Senate is expected to vote on the final bill on Monday, with the House to follow on Tuesday.

On Friday, the lone Republican Senator to vote against the Senate Bill earlier this month, Bob Corker (R-TN), announced that he would be voting for the final bill. Marco Rubio (R-FL), who had been holding out for an increase in the refundability of the child tax credit, also said that he's a "yes."

The final measure is now widely expected to pass both chambers ahead of Congress's holiday recess.

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