House Speaker Paul Ryan of Wis., center, leaves the House Chamber after voting on the Republican tax bill, Tuesday, Dec. 19, 2017, on Capitol Hill in Washington. Republicans muscled the most sweeping rewrite of the nation's tax laws in more than three decades through the House. (AP Photo/Jacquelyn Martin)
Debbie Lord, Cox Media Group National Content Desk
The House and Senate voted Tuesday and early Wednesday, to pass the largest overhaul of the U.S. tax code in more than 30 years. The bill passed on a 227-203 vote. No Democrats voted for the new legislation.
In the Senate, the Tax Cuts and Jobs Act passed on a 51-48 vote at 12:40 a.m. ET on Wednesday. President Trump is expected to sign the legislation before Christmas.
The House will vote again on the bill on Wednesday because of technical issues with the first vote.
Here are a few takeaways from the new law.
The corporate tax rate has been cut from 35 percent to 21 percent beginning on Jan. 1, 2018.
The 20 percent corporate alternative minimum tax has been repealed.
The legislation creates a 20 percent deduction for the first $315,000 on pass-throughs, or businesses such as partnerships. The deduction is for qualified business income for joint filers.
The law imposes a one-time mandatory tax of 8 percent on illiquid assets, assets not easily converted into cash, and 15.5 percent on cash and cash equivalents for U.S. business profits held overseas. The more than $2 billion held now in overseas banks is a product of a rule that made foreign profits tax-deferred if they are not brought into the United States, or repatriated.
Businesses may now write off the full value of investments in new plant and equipment for five years. Beginning in year six, the 100 percent expensing of a new plant and equipment is eliminated.
The bill provides tax credits for producing electricity by using geothermal, solar, municipal waste, hydropower, biomass and wind.
For individuals, the current seven tax brackets remain, but income levels and rates have been changed.
For homes purchased from Jan.1, 2018 through Dec. 31, 2025, the bill caps the deduction for mortgage interest at $750,000 in home loan value. After Dec. 31, 2025, the cap is $1 million in loan value. The bill also suspends the deduction for interest on home equity loans until 2026.
The standard deduction has been increased to $12,000 from $6,350 for individuals, and to $24,000 from $12,700 for married couples filing jointly..
The child tax credit has doubled to $2,000 per dependent child under age 17. There is a refundable portion of $1,400.
The personal exemption of $4,050 is eliminated. The personal exemption is a fixed exemption some could take off their adjusted gross income.
The exemption for estate and gift taxes is increased to $10 million from $5 million per person.
Beginning in 2019, the new legislation eliminates the Affordable Care Act’s individual mandate.
Families can deduct up to a total of $10,000 in local property and state and local income taxes.
Below are the changes in income tax rates for married couples filing jointly and for singles. The changes take effect on Jan. 1, 2018.
10 percent up to $19,050, versus 10 percent up to $18,650 under existing law;
12 percent on $19,051 to $77,400, versus 15 percent on$18,651 to $75,900;
22 percent on $77,401 to $165,000, versus 25 percent on $75,901 to $153,100;
24 percent on $165,001 to $315,000, versus 28 percent on $153,101 to $233,350;
32 percent on $315,001 to $400,000, versus 33 percent on $233,351 to $416,700;
35 percent on $400,001 to $600,000, versus 35 percent on $416,701 to $470,700
37 percent above $600,000, versus 39.6 percent above$470,700.
For single individuals, effective Jan. 1, 2018 and ending in 2026, income tax would be:
10 percent up to $9,525, versus 10 percent up to $9,325 under existing law;
12 percent from $9,526 to $38,700, versus 15 percent on $9,326 to $37,950;
22 percent on $38,701 to $82,500, versus 25 percent on $37,951 to $91,900;
24 percent on $82,501 to $157,500, versus 28 percent on $91,901 to $191,650;
32 percent on $157,501 to $200,000, versus 33 percent on $191,651 to $416,700;
35 percent on $200,001 to $500,000, versus 35 percent on $416,701 to $418,400;
37 percent above $500,000, versus 39.6 percent above $418,400.
These brackets would expire after 2025.
The bill also allows drilling in Alaska’s Arctic National Wildlife Refuge.