Over the weekend, the Republican Senators successfully passed the bill with a close 51-49 vote. All Democrats and one Republican opposed the bill.
The House passed their own bill two weeks ago. There are two things that could happen now: the House of Representatives could just pass the Senate bill the way it is now before President Trump signs it. The second possibility is that both the House and Senate would negotiate on a final legislation. The final legislation would be called a “conference report” which both House and Senate would have to vote on before President Trump signs it.
If you are a college student, Gallaudet and RIT/NTID, you will be especially impacted. Those who are most negatively impacted are low income, single, graduate students and teachers. However, this bill will likely benefit you if you have a family, a house, decent income, or own a business.
Here is a comparison between the House and Senate bills.
Currently there are 7 tax brackets, which means there are 7 ranges of income that the government can tax you. The House wants to reduce it to 4 brackets but the Senate wants to keep it at 7.
Corporate Tax Rate
Both bills reduce the rate from the current rate of 35% to 20% the goal is to bring more business back to America.
Local/State Income Tax
Currently we pay state taxes. The Senate wants to remove state taxes and increase the federal tax rate to offset the loss and have all americans pay a single tax rate instead. This wouldn’t be good for state funding.
Obamacare has been a hot debate. The Senate wants to eliminate it, but the House wants to keep it.
Both bills from the House and Senate would almost double the standard deduction. Standard deduction is how much you can deduct from your personal expenses for taxes. Currently an individual can deduct $6,500, a head of a Household can deduct $9,550 a married couple can deduct $13,000.
Child Tax Credit
The credit is currently at $1,000. The House would increase the credit by $600 to $1,600 while the Senate wants to increase it from $1,000 to $2,000. This is good for those who have children.
New Temporary Family Credit
Both the Senate ($500) and House ($300) want to provide a new temporary family credit. This means that for every child or dependent you have in your Household you’ll be given a tax credit, each dependent will phase out after 5 years. This credit is targeted towards the middle class.
Mortgage Interest Deduction
The Senate wants to keep this deduction the way it is now while the House wants to cut deduction from $1 million to $500,000.
Medical Expense Deduction
Currently you can deduct your medical and dental expenses that exceed 10% of your adjusted gross income. The Senate wants to decrease this deduction slightly to 7.5% while the House wants to eliminate it entirely.
Teachers Deduction for School Supplies
Teachers who buy their own supplies for their classrooms are allowed a deduction. The Senate wants to increase the deduction by $250 to $500 while the House wants to eliminate it entirely.
Graduate Student Tuition Waiver
Currently Graduate students are able to waive the taxation of their tuition. The Senate wants to keep this waiver while the House wants to eliminate it. This has led to several graduate student led protests around the country.
Student Loan Interest Deduction
Currently you can deduct the interests of your student loans on your taxes, the Senate wants to keep this deduction, while the House wants to eliminate it.
How do you feel about the proposed changes? Please share your thoughts with us.