Comparing Key Elements of H.R. 1 to 2017 Tax Law

Comparing Key Elements of H.R. 1 to 2017 Tax Law

December 22, 2017
Comparing Key Elements of H.R. 1 to 2017 Tax Law
H.R. 1 was passed in both the House and the Senate on December 20, 2017 (before the final version was passed, this bill
was called the Tax Cuts and Jobs Act). The act substantively changes the federal tax system. This In Focus compares
selected key elements of the act, as passed on December 20, 2017, to current law as of 2017. It builds on an earlier In Focus
that compared the earlier House-passed and Senate-passed versions of the proposal (CRS In Focus IF10776, Comparing
Key Tax Reform Elements: Tax Cuts and Jobs Act, by Mark P. Keightley and Molly F. Sherlock). The comparisons are not
intended to be complete or comprehensive; such a comparison is beyond the scope of this product.
Table 1. Comparison of Major Provisions in H.R. 1 to Current Law
Tax Provision
Current Law (2017)
H.R. 1, as passed on December 20, 2017
Individual Provisions
Individual tax rates
7 brackets: 10% | 15% | 25% | 28% | 33% | 35% |
7 brackets: 10% | 12% | 22% | 24% | 32% | 35% |
39.6%.
37%.
(Expires 1/1/2026.)
Personal exemptions and
Personal exemption: $4,050 for taxpayer, spouse,
Personal exemptions repealed. Standard
standard deduction
and dependents. Standard deduction: $6,350
deduction: $12,000 (single) and $24,000 (married)
(single) and $12,700 (married).
in 2018.
(Expires 1/1/2026.)
Inflation adjustment
Consumer Price Index (CPI).
Chained CPI.
Child-related provisions/
Refundable child tax credit of $1,000. Phase out
$2,000 credit per child (up to $1,400 refundable).
personal credits
begins at $110,000 (married) and $75,000 (single). Phase-out thresholds increased to begin at
$400,000 (married) and $200,000 (single). Social
Security number requirement for child credit.
$500 nonrefundable credit for non-child
dependents.
(Expires 1/1/2026.)
Itemized and other
Various itemized and “above-the-line” deductions.
Repeal itemized deduction for non-disaster
deductions
Mortgage interest deductible on up to $1 mil ion
casualty losses, home equity loan interest, moving
loan, plus $100,000 for home equity loan.
expenses (military exception), and certain
miscellaneous itemized deductions.
Modified deductions include state and local taxes
limited to $10,000; mortgage interest limited to
$750,000 on new loans; alimony not deductible or
taxable.
(Expires 1/1/2026.)
Education incentives
Various credits and deductions for education-
Provisions generally retained.
related expenses.
Other individual tax
Various exclusions, credits, and other individual
Repeal exclusion for moving expenses (military
expenditures
provisions.
exception).
(Expires 1/1/2026.)
Individual AMT
Alternative Minimum Tax (AMT).
Increase exemption amount ($109,400, married
and $70,300, single) and phase-out threshold ($1
mil ion, married and $500,000, single).
(Expires 1/1/2026.)
Estate tax
Tax above exemption ($5.49 mil ion, 2017).
Double exemption amount.
(Expires 1/1/2026.)
Business Provisions
https://crsreports.congress.gov

Comparing Key Elements of H.R. 1 to 2017 Tax Law
Tax Provision
Current Law (2017)
H.R. 1, as passed on December 20, 2017
Corporate tax rate
Maximum rate of 35%.
Flat 21% rate in 2018.
Pass-through businesses tax
Taxed according to ordinary individual rates up to
Taxed according to ordinary individual rates.
rate
39.6%.
Taxpayers may deduct 20% of qualified pass-
through income. Deduction limited to the greater
of 50% of W-2 wages, or 25% of W-2 wages plus
2.5% multiplied by qualified property. Specified
service business may not claim deduction.
Deduction limitation and specified service business
limitation do not apply if taxable income is less
than $157,500 (single) or $315,000 (married).
Specified service business definition does not
include architecture or engineering firms.
(Expires 1/1/2026.)
Business interest
Deduction for net interest limited to 50% of
Deduction for net interest limited to 30% of
adjusted taxable income for firms with debt-equity
adjusted taxable income. Interest above limitation
ratio above 1.5. Interest above limitation may be
may be carried forward indefinitely. Businesses
carried forward indefinitely.
with average annual gross receipts over last three
years of $25 mil ion or less are exempted.
Depreciation
Most assets depreciated over time. Bonus
Ful and immediate expensing (100% bonus
depreciation for equipment through January 1,
depreciation) for equipment through 2022;
2020. Immediate expensing up to $500,000.
percentage reduced by 20% per year for four years
starting 2023. Expansion of expensing to $1 mil ion
for small businesses.
Corporate AMT
20% in excess of $40,000.
Repealed.
International tax system
Worldwide-based with deferral of active income.
Territorial-based with taxation of income from
intangibles and other anti-base-erosion provisions.
Tax on repatriated earnings
Tax due when foreign-source income is
One-time deemed repatriation: 15.5% on cash and
repatriated to U.S. parent; exceptions for certain
cash equivalents, 8% otherwise, paid over 8 years.
passive and branch income. Taxed at 35%. Foreign
Foreign tax credits partially available.
tax credits available.
Other business tax
Various credits and deductions for businesses.
Repeal Section 199 domestic production activities
expenditures
deduction. Net operating loss (NOL) deduction
limited to 80% of taxable income beginning in
2018. Carryback generally repealed, indefinite
carryfoward.
Source: CRS analysis of 2017 current law and H.R. 1, as passed on December 20, 2017.
Mark P. Keightley, Specialist in Economics
Molly F. Sherlock, Specialist in Public Finance
IF10796

https://crsreports.congress.gov

Comparing Key Elements of H.R. 1 to 2017 Tax Law

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https://crsreports.congress.gov | IF10796 · VERSION 2 · NEW