The Senate plans to introduce their version of tax reform today, which will give a typical American family a tax cut of nearly $1,500, according to a two-page summary of the bill.
Named the Tax Cuts and Jobs Act like its corresponding House version, the bill attempts to give American companies a level playing field and reduce the tax burden on small businesses so more jobs are created in the United States.
"This is our once-in-a-generation opportunity to lower taxes and shift the economy into high gear," said Senate Majority Leader Mitch McConnell (R., Ky.) on the Senate floor today. "In fact, tax reform represents the single most important thing we can do to spur growth and help American families."
"For you and your family, we want to make taxes lower, simpler, and fairer. For small businesses, we want to make it easier to navigate the tax code, grow, and hire workers," he said. "And for all businesses, we want to make it an easy decision for them to bring investment and jobs home and keep them here."
On the individual side, the Senate bill expands the zero tax bracket and maintains the 10 percent bracket so more low- and middle-income Americans can keep more of their paychecks. Top earners will pay a rate of 38.5 percent in the Senate version, which is lower than the 39.6 percent rate cited in the House version.
The bill nearly doubles the standard deduction from $6,350 to $12,000 for individuals, from $12,700 to $24,000 for married couples, and from $9,300 to $18,000 for single parents.
The legislation increases the child tax credit from $1,000 to $1,600 and preserves the child and dependent care tax credit so parents can either support their children or older dependents.
The bill also preserves the Earned Income Tax Credit to give relief to low-income Americans. It also allows individuals to deduct medical expenses, provides relief for education costs for graduate students, and enhances the standard deduction for the elderly and the blind.
The legislation also promotes charitable giving and allows deductions for charitable contributions and preserves the home-mortgage interest deduction. The bill also helps Americans save for their future by continuing retirement savings programs like 401(k)s and individual retirement accounts.
The bill repeals the alternative minimum tax so the tax code is simplified and doubles the current exemption from the death tax.
"This will reduce uncertainty and costs for family-owned farms and businesses by making it less likely that Washington will impose an unnecessary layer of taxation on Americans who want to pass on their life's work to the next generation," the Senate Finance Committee said.
On the corporate side, the plan reduces the corporate tax rate to 20 percent from 35 percent, which is the largest corporate tax cut in American history. Businesses are also allowed to immediately expense new equipment as a result of the plan, which can help the skills of workers and boost jobs, paychecks, and productivity.
The bill keeps a low-income housing tax credit so businesses can invest in affordable housing. The measure also preserves the research and development tax credit to promote "Made in America" services and products.
The legislation will help keep jobs here in the United States since it prevents them from moving their headquarters and research overseas. Under the plan, the international tax system will be modernized so it won't be subject to a "worldwide" tax system that taxes many job creators twice.
"I look forward to continuing to work with colleagues in both the House and the Senate along with President Trump and his team on our mutual tax reform goals," McConnell said. "And our main goal is this: We want to take more money out of Washington's pockets and put more money in the pockets of the middle class."