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By now most of you know that pending tax reform legislation is underway. On November 16 the House of Representatives’ passed its version – HR 1: The Tax Cuts and Jobs Act. Also on November 16, the Senate Finance Committee approved its amendments. Next week we should see the full Senate’s vote. As we promised many of you during this last tax season, we wouldn’t trouble you until we had actual pending legislation to dissect. That time has come.

As you may be aware, once both chambers of Congress have approved their versions, the bills will go to a joint committee for reconciliation, then back to the legislature for a vote. With that said, it may be the latter part of December before we know for sure which details survive and which are modified. For now, we’ll only address what we think you need to know before year end.

Effective date. It seems pretty clear that any new law will not be retroactive. The changes will affect taxes next year, for 2018 and later.

Tax rates. Many taxpayers will experience lower marginal rates, but also a loss of deductible expenses. The House bill calls for individual marginal rates of 12%, 25%, 35% and 39.6%. The Senate proposes 7 brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 38.5%. In both cases, the top bracket begins at $1 million taxable income for marrieds filing a joint return.

Deductions. The House bill doubles the standard deduction and, except for charitable contributions and limited property taxes and mortgage interest, eliminates all other itemized deductions. The Senate also doubles the standard deductions, but, in addition to contributions, retains medical expenses and mortgage interest on up to $1 million of home acquisition debt, while completely eliminating any state and local tax deduction (including property taxes) and any home equity debt interest.

Personal exemptions. Both bills eliminate any deduction for personal exemptions.

Repeal of Alternative Minimum Tax. For those of you who have been subject to this “stealth” tax, this provision may not be as life-changing as it seems. With many deductions eliminated in the regular tax that were previously only disallowed under AMT, your tax bill might not change that much, if at all.

Estate taxes. The current House bill does not repeal the estate tax entirely until 2024. In the meantime, it does nearly double (to $10 million per person) the amount of an estate that can be transferred without

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