The Senate passed its tax bill on December 2nd by a 51-49 margin. Some key points include:

  1. Pass-through deduction raised to 23% from the originally proposed 17.4%. Notably – this excludes “specialized service businesses” as defined.
  2. Property tax deductions maintained with a $10,000 limit. Removes ability to deduct all other state and local taxes.
  3. Medical expense deductions maintained subject to income level limitations.
  4. Starting in 2019, C corporation tax rate to 20% relative to today’s top marginal rate of 35%. Bill crafted to make this cut permanent.
  5. Top marginal personal income tax rate to 38.5% from today’s 39.6%. Most changes on personal side expire on 1/1/2026. Standard deduction doubles to $12k and $24k for individuals and married couples, respectively. Personal exemption of $4,050 eliminated.
  6. Estate/GST exclusion amounts doubled to $11mm and $22mm for individuals and married couples, respectively. However, the new higher limits are set to expire on 1/1/2026. Step-up in basis at death maintained, a critical point.
  7. Obamacare mandate repealed.
  8. Child tax credit doubled to $2,000 from $1,000 today. Income level at which this is phased out jumps to $500k per married couple from $110k today.
  9. Companies may repatriate overseas profits at a one-time rate of 14.5% for cash and 7.5% for non-cash assets.
  10. Full capital expensing allowed for five years, then scaled back gradually thereafter.

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