The Senate and the House have both passed massive, broadly similar tax bills that would reshape America's tax code to favor all sorts of business and strike out a number of popular and large tax breaks enjoyed by a wide swath of middle- and high-earners.
But they aren't, however, the same bill.
The two bills from the two respective chambers need to be combined in negotiations between the House and Senate and passed by both houses before going to President Trump's desk to be signed. Many analysts expect the final bill to hew closer to the Senate version because it passed with a narrow two-vote margin and because the upper chamber passed the legislation under strict parliamentary rules.
While the bills are expected to be melded together and signed within weeks, here are some of the biggest differences that need to get sorted out:
Exactly how little to tax corporations — and when
Both the House and Senate bills reduce the corporate tax rate to 20%. But the Senate bill starts the lower rate in 2019 rather than 2018 in order to reduce the budgetary cost of the bill.
The two also take different approaches to taxing so-called pass-through businesses, whose owners report their business income on their personal tax returns. The House bill slashes the top tax rate to 25%, while the Senate bill allows these businesses to deduct 23% of their income from tax.
In the week leading up to Friday's Senate vote, Republican senators negotiated a deeper deduction for pass-through rates, but had to make up the money elsewhere to stay within self-imposed limits on how much the bill can expand the deficit in the 10 years after its passage and how it's not allowed to project as deficit-increasing at all after 10 years.
The individual mandate
Perhaps the biggest substantive change between the House and Senate bills is that the Senate bill eliminates one of the core features of the Affordable Care Act: the tax penalty for people who don't purchase health insurance.
The Congressional Budget Office estimated in November that scrapping the individual mandate would lead to 4 million more uninsured people in 2019 and 13 million more in 2027 than there would otherwise be under the current health care law. The CBO also estimated that premiums in the individual insurance market would rise by about 10% "in most years of the decade" compared to their projections with Obamacare intact, as healthy people would be expected to drop out of the individual insurance market, thus pushing premiums higher as the overall group of people buying insurance becomes more likely to be sick and more expensive to treat.
Obamacare is broadly unpopular among House Republicans — the House, after all, passed a bill to repeal it earlier this year, while the Senate could not. Trump also supported striking out the mandate in the Senate tax bill.
One of the House bill's most controversial provisions would force graduate students to pay taxes on their waived tuition, which would greatly increase their tax bills despite the fact the only cash they tend to receive is a small stipend. The Senate preserved this break for tuition waivers.
How big the child tax credit should be
While the tax cuts contained in the two bills are tilted mostly towards business, one of the biggest tax benefits for typical taxpayers is an expanded child tax credit. The House bill bumped the credit from $1,000 to $1,600, while the Senate's bill pushed the credit to as high as $2,000 per child.
While Sens. Mike Lee and Marco Rubio tried to expand the child tax credit past what the Senate did by allowing people who only paid payroll taxes and not income taxes to claim its full value, they were unable to change the bill in order to do so because it would have required bumping up the corporate tax rate to 21% or 22%.
Since the Senate vote, however, Trump has said he's open to setting the corporate rate at 22%, which could allow for some changes.
Individual tax brackets
The House bill more completely overhauled the individual income tax system, reducing the current seven brackets with a top rate of 39.6% to four brackets with a special 45.6% rate that would only include some high-wage taxpayers. The Senate bill has seven brackets with a 38.5% top rate.
Many of the cuts in the Senate bill expire in 2025 in order to comply with Senate rules that don't allow it to pass legislation that will increase deficits after 10 years with only 51 votes.
The estate tax
Both bills substantially lower the estate tax. The House bill doubles the current exemption to about $11 million and, in seven years, repeals it entirely. The Senate bill doubles the exemption.
The alternative minimum tax
One of the biggest last minute changes to the Senate bill was including a modified version of the individual alternative minimum tax, which is essentially a second tax code that affects some high-income taxpayers if the amount of deductions they get to claim forces their overall tax bill too low.
The Senate was forced to include the AMT, as well as the corporate version of it, as part of its tax bill in order to pay for deeper tax cuts for businesses. The House bill gets rid of the AMT entirely, which has been a longtime goal for conservatives who argue the AMT makes the tax code too complicated.
Matthew Zeitlin is a business reporter for BuzzFeed News and is based in New York. Zeitlin reports on Wall Street and big banks.
Contact Matthew Zeitlin at email@example.com.
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