President Donald Trump on Friday signed into law H.R. 1, known as the Tax Cuts and Jobs Act, which makes widespread changes to the Internal Revenue Code. Almost all of its provisions, including a lower corporate tax rate of 21% and lower individual income tax rates, go into effect Jan. 1.
The legislation has been on a fast track as well. It was introduced in the House of Representatives on Nov. 2 and passed on Nov. 16. The version the House passed repealed the medical expense deduction and many other individual tax deductions. It also reduced the number of individual income tax brackets from seven to four.
The Senate introduced its version of H.R. 1 on Dec. 1 and approved the bill in the early hours of Saturday, Dec. 2. The Senate version retained the medical expense deduction and many other deductions for individuals that were slated for elimination in the House bill, including the deduction for student loan interest and the above-the-line deduction for schoolteachers' supply purchases.
To reconcile the differences between the two bills, the Senate and the House appointed members of a conference committee, which negotiated a revised final bill. The committee released its revised bill on Dec. 15.
The House passed the bill on Tuesday, Dec. 19, and the Senate passed it early on Wednesday, Dec. 20, all with partisan votes of only Republicans. After the House passed the bill, the Senate parliamentarian ruled on an objection that the version of the bill as passed by the House violated the Byrd rule, which prohibits "extraneous items" from being in a bill passed using the reconciliation process that permits legislation to pass the Senate with only a majority vote. The House voted on a revised bill with the offending parts of the legislation removed for a second time on Wednesday, passing it by a vote of 224–201.
The act was then sent to the president for his signature.
— Sally P. Schreiber (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.