What’s Contained in the Senate Tax Bill
The Senate recently unveiled its long-awaited tax bill, which aims to overhaul the current tax system in the United States. The bill contains a number of key provisions that will affect individuals, corporations, and small businesses. Here’s a breakdown of what’s included in the Senate tax bill:
1. Reduction in Individual Tax Rates: The bill proposes to reduce the number of tax brackets from seven to four, with the top rate dropping from 39.6% to 38.5%. The bill also increases the standard deduction and eliminates personal exemptions.
2. Child Tax Credit: The Senate bill increases the child tax credit from $1,000 to $1,650 per child, with a phase-out for higher-income earners. This is a key provision that will benefit families with children.
3. Mortgage Interest Deduction: The bill preserves the mortgage interest deduction for existing homeowners, but limits it for new home purchases to the first $500,000 of a loan.
4. State and Local Tax Deduction: The Senate bill eliminates the deduction for state and local income and sales taxes, but retains a deduction for property taxes up to $10,000.
5. Corporate Tax Rate: The bill proposes to reduce the corporate tax rate from 35% to 20%, a move that is expected to benefit large corporations and stimulate economic growth.
6. Pass-Through Entities: The bill includes a 17.4% deduction for pass-through entities, such as partnerships and S corporations, which will benefit small businesses and entrepreneurs.
7. Estate Tax: The bill doubles the estate tax exemption to $11.2 million per individual, effectively eliminating the estate tax for all but the wealthiest Americans.
8. Alternative Minimum Tax: The bill repeals the alternative minimum tax, which will benefit high-income earners who are currently subject to this additional tax.
Overall, the Senate tax bill represents a significant overhaul of the current tax system in the United States. While the bill contains provisions that will benefit individuals, corporations, and small businesses, it has also been met with criticism from some lawmakers and advocacy groups. The bill is still being debated in Congress and will likely undergo further changes before a final version is passed into law.
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