As Congress prepared to begin the process of reconciling its various tax reform bills in the first week of December, the final shape of the Senate’s Tax Cuts and Jobs Act gave important clues as to the shape the changes to the Tax Code may ultimately take.

In the run-up to the passage of the bill at 2 a.m. on Saturday morning, the Senate made a number of changes to its original proposal, many of them aimed at bringing it more into line with the House proposal that passed in mid-November, and others aimed at addressing the concerns of individual Republican senators.

With those changes as a guide, it’s possible to compare the two acts and get a much clearer idea of where Congress can – and can’t – reach a consensus. With that in mind, here are six things that are highly likely to be part of any final tax reform legislation.

1. Lower corporate tax rates. Lowering the overall rate for businesses is a core goal of GOP leaders, and is included in both the Senate and House bills. The aim of both is to take the overall rate from 35 percent down to 20 percent; the Senate nixed a proposal to raise the rate to 22 percent. That said, the House proposal would institute the cuts immediately, while the Senate would postpone them for a year.

2. An increased standard deduction. Both bills would significantly boost this to $12,000 for individuals and $24,000 for married couples.

3. Goodbye to the personal exemption. The House and the Senate agree on eliminating the current $4,050 personal exemption that taxpayers can claim for themselves, their spouses and each of their dependents.

4. A higher estate tax exemption. Both the House and Senate bills double the size of estates that are subject to the estate tax – from $5.5 million to $11 million. The House wants to kill the so-called “Death Tax” entirely after six years, however, while the upper house wants to leave it in place.

5. Keeping a rump of the state and local tax deduction. The Senate bill had originally eliminated all deductions for state and local taxes; Sen. Susan Collins, R-Maine, championed keeping a $10,000 deduction for state and local property taxes (but not income or sales taxes). This brought the Senate bill in line with the House proposal.

6. Taxing assets held abroad. The House would tax corporations on cash held abroad at 14 percent, at 7 percent on non-cash assets. The Senate bill originally had lower rates, but raised them to get more in line with the House.

Bones of contention

For all those areas of agreement, some differences still remain to be discussed in the conference committee. Among the most important of them are:

• Tax brackets: The House wants four, the Senate wants seven, but at lower rates; they’ll need to work out their differences to make any changes here.
• Pass-throughs. The final treatment of pass-through entities remains uncertain. The Senate bill increased the proposed amount of profits that pass-through owners can deduct from around 17 percent to 23 percent; the House would tax pass-throughs at 25 percent, but only after complex calculations depending on whether the taxpayer is an active or a passive participant in the business. (The House also wouldn’t allow service pass-throughs, like accounting firms, to take advantage of the lower rate.) Expect wrangling over these details.
• Mortgage interest deduction: The House wants to only allow the deduction for mortgage interest for loans up to $500,000, while the Senate bill would leave the deduction available for home loans of up to $1,000,000, the current limit.
• The AMT. The House would kill the Alternative Minimum Tax entirely, but the Senate dropped plans to do the same, opting instead only to adjust it, to raise revenue.

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