As anticipated, the Senate Republicans released a tax reform plan on Nov. 9, which is positioned to heavily impact individuals and businesses. Like the Tax Cuts and Jobs Act released by the House GOP earlier in November, the plans calls for lowering the individual and corporate tax rates, repealing several tax credits and deductions, enhancing the child tax credit, eliminating the Alternative Minimum Tax (AMT), boosting business expensing,  both domestically and internationally, and more.

Doeren Mayhew’s tax advisors highlight details from the Senate GOP plan below and how it compares to the House GOP bill:


  • Unlike the House GOP bill’s four proposed tax rates, the Senate GOP plan calls for seven:

  • Raises the standard deduction to $24,000 for married filing jointly, $12,000 for single filers and $18,000 for heads-of-households. Similarly, the House GOP bill calls for these amounts to be $24,400, $12,200 and $18,300, respectively.
  • Preserves the $1 million limitation on the home mortgage interest deduction, but eliminates the home equity interest deduction. Under House GOP bill, the current $1 million deduction would be reduced to $500,000, for most debt incurred after the proposed effective date of Nov. 2, 2017.
  • Eliminates the state and local tax deduction, plus there would be no carve-out for property taxes as in the House GOP bill.
  • Retains the medical expense deduction, while the House GOP bill repeals it.
  • Increases the child tax credit to $1,650 and allows a $500 credit for non-child dependents, which is higher than what is proposed in the House GOP bill at $1,600 and $300, respectively.
  • Keeps the earned income tax credit, as does the House GOP bill.
  • Maintains the current child adoption credit, which is a maximum amount of $13,570 in 2017 and is scheduled to increase to $13,840 in 2018, as does the House GOP bill
  • Aligns contribution limits under 401(k), 402(b) and 457 plans, plus makes early withdrawals from 457 plans subject to the early withdrawal penalty. The Senate GOP plan also eliminates the “catch-up” contributions for employees with compensation in excess of $500,000. Meanwhile, the House GOP bill generally retains current rules for 401(k) and other retirement plans, but would repeal the rule allowing taxpayers to recharacterize Roth IRA contributions as traditional IRA contributions and the rule allowing conversion of a traditional IRA to a Roth IRA.
  • Retains the current federal estate tax of 40 percent, but increases the basic exclusion to $10 million for individuals, subject to inflation adjustments. The House GOP bill calls for doubling the current federal estate tax exemption of $5,490,000, until 2023.

Like the House GOB bill, the Senate GOP plan also calls for abolishing AMT.  Additionally, both the Senate GOP plan and House GOP bill do not change the current tax treatment of qualified dividends, capital gains, Affordable Care Act, net investment income, Medicare and medical device excise tax.


  • Calls for a 20 percent corporate tax rate beginning in 2019, whereas the House GOP bill aims to make the 20 percent rate effective in 2018.
  • Provides for a 17.4 percent deduction of income for pass-through entities or sole proprietors, but eliminates this deduction for specified service providers with income in excess of threshold amounts. The House GOP bill proposes a 25 percent tax rate for pass-through income after 2017, with a 9 percent rate for certain small businesses. Additionally, the House GOP bill prevents pass-through owners – particularly professional service providers – from converting their compensation income taxed at higher rates into profits taxed at the 25 percent level.
  • Allows a 100 percent immediate expensing of qualified property for a five-year period (qualified property acquired and placed in service after Sept. 27, 2017 and before Jan. 1, 2023, with an additional year for certain longer production period property), as does the GOP House bill.
  • Proposes the Code Sec. 179 expensing limitation to be $1 million, with a $2.5 million phase-out amount, while the House GOP bill increases the expensing limitation to $5 million and the phase-out to $20 million for tax years beginning before 2023.
  • Caps the deduction for net interest expenses at 30 percent of adjusted taxable income, as does the House GOP bill.
  • Eliminates numerous tax deductions and credits, as does the GOP House bill, including:
    • 199 domestic production activities deduction
    • Non-real property like-kind exchanges
    • Work Opportunity Tax Credit

Like the House GOP bill, the Senate GOP plan keeps the research and development credit, but does not require the five-year amortization of research and development expenditures. Additionally, the rules for business meals would be revised.


  • Reduces the rate of tax on deferred overseas-held earnings and profits of subsidiaries to 10 percent and 5 percent for illiquid holdings, similarly to the GOP House bill.

Under both plans, foreign tax credit carryforwards would be fully available and foreign tax credits triggered by the deemed repatriation would be partially available to offset the U.S. tax. This is in an effort to provide an incentive for businesses to not shift operations overseas moving forward.

As more details unfold related to both plans, look to our tax advisors to help keep you informed on how these provisions may impact you and your business.  If you have questions, contact us today.