Here's what's in the Senate Republican tax bill

Tax cuts are a big gift to business. But will workers win too?
Tax cuts are a big gift to business. But will workers win too?

Senate Republicans have put themselves under the gun to vote on a tax bill this week.

The Senate's tax-writing committee passed the bill before Thanksgiving. It's already been amended a few times since it was first introduced, and there may be more changes to come this week.

The Senate bill differs in key ways from the tax reform bill passed by the House earlier this month, and eventually the bills' differences must be reconciled.

Related: Senate bill adds $1 trillion to deficits, even with growth

Broadly, all income groups under the Senate bill would see their after-tax incomes rise on average in the first few years. But the benefits for middle- and low-income groups diminish or disappear afterward -- meaning the groups' after-tax incomes would drop on average -- due to their tax cuts expiring after 2025, the bill's use of slower inflation adjustments in the tax code and the repeal of the mandate to buy health insurance.

Here are some notable provisions in the Senate bill that would affect taxes on individuals and businesses.

FOR INDIVIDUALS

Changes individual income tax brackets: There are seven brackets in today's individual tax code: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

The Senate bill also calls for seven brackets but changes the rates on taxable income to:

10% (income up to $9,525 for individuals; $19,050 for married couples filing jointly)

12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)

22% (over $38,700 to $70,000; over $77,400 to $140,000 for couples)

24% (over $70,000 to $160,000; over $140,000 to $320,000 for couples)

32% (over $160,000 to $200,000; over $320,000 to $400,000 for couples)

35% (over $200,000 to $500,000; over $400,000 to $1 million for couples)

38.5% (over $500,000; over $1 million for couples)

The House bill, by contrast, only calls for four brackets: 12%, 25%, 35% and 39.6%.

Nearly doubles the standard deduction: Like the House bill, Senate Republicans would significantly raise today's standard deduction. In the Senate bill, the deduction for singles increases to $12,000 from $6,350 currently; and it raises it for married couples filing jointly to $24,000 from $12,700.

That would drastically reduce the number of people who opt to itemize their deductions, since the only reason to do so is if your individual deductions combined exceed the standard deduction amount.

Eliminates personal exemptions: Today you're allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents. Both the Senate and House bills eliminate that option.

For families with three or more kids, that could mute if not negate any tax relief they might enjoy as a result of other provisions in the bill.

Fully repeal state and local tax deduction: The Senate bill would no longer let individual filers deduct their property taxes or their state and local income or sales taxes.

Eliminating the state and local tax deduction was met with strong opposition from House lawmakers in high-tax states and cities. So a concession was made in the House Republicans bill to restore an itemized deduction for property taxes up to $10,000.

If and when the time comes for the House and Senate to reconcile the differences between each chamber's passed bills, the SALT deduction could be a huge sticking point.

Expands the child tax credit: The Senate GOP bill increases the child tax credit to $2,000 per child, up from $1,000 today, and above the $1,600 proposed in the House bill.

Senate GOP tax writers would make the credit available for any children under 18, up from today's under-17 age limit.

But the $1,000 increase won't be available to the lowest income families if they don't end up owing federal income taxes. That's because unlike the first $1,000, the additional $1,000 wouldn't be refundable. When a credit is refundable, it means you still can get money from the government because of the credit, even when your federal income tax bill is zero.

The Senate bill also greatly expands who is eligible for the credit by raising the roof on the income thresholds where the credit starts to phase out: To $500,000 for married tax filers, up from $110,000 today.

Meanwhile, filers with dependents who are not qualified children may be able to claim a new $500 nonrefundable credit per dependent. Under the House bill, there would be a new $300 per person credit for parents and dependents over 17.

Keeps mortgage interest deduction as is: The Senate bill would still let you claim a deduction for the interest you pay on mortgage debt up to $1 million.

House tax writers proposed capping the loan limit at $500,000 for new mortgages.

But since the House and Senate bills nearly double the standard deduction, the percent of filers who claim the mortgage interest deduction would drop sharply.

The Senate bill does make two changes on home-related financing. It disallows interest deductions for home equity loans. And it lengthens the time you must live in a home to get the full tax-free exclusion on your gains when you sell it.

Repeals the Alternative Minimum Tax: The AMT, originally intended to ensure the richest tax filers pay at least some tax by disallowing many tax breaks, most typically hits filers making between $200,000 and $1 million today.

Those who make more than that usually find they owe more tax under the regular income tax code, so must pay that tab instead.

Tax experts often note the AMT no longer meets its original purpose and further complicates an already complex tax code. But it's been kept on the books because it raises a lot of revenue.

Preserves the estate tax, but exempts almost everybody: Unlike the House GOP bill, Senate Republicans have not proposed repealing the estate tax.

But they are proposing to double the exemption levels -- which are currently set at $5.49 million for individuals, and $10.98 million for married couples. Even at today's levels, only 0.2% of all estates ever end up being subject to the estate tax.

Increases teacher deduction: Teachers who buy their own supplies for the classroom may deduct up to $250 today. The Senate bill doubles that amount to $500.

The House bill, by contrast, eliminates the deduction.

Repeals the individual mandate to buy health insurance: The repeal is intended as a way to offset the cost of the tax bill. It is estimated to save money because it would reduce how much the federal government spends on insurance subsidies, since the assumption is fewer people who qualify for subsidies would purchase insurance if they're not subject to a penalty.

But policy experts also note it could raise premiums because more healthy people might decide to skip buying insurance.

FOR BUSINESSES

Cut the corporate rate ... in a year: Like the House bill, the Senate bill would cut the corporate tax rate to 20% from 35% today. But the 20% rate would not take effect until 2019 under the Senate proposal. The delay would reduce the cost of the measure in the first 10 years.

Make expensing rules more generous: Senate Republicans want to make it possible for businesses to immediately and fully expense new equipment, for at least five years, similar to a provision in the House bill.

Lower taxes on pass-through business income: Most U.S. businesses are set up as pass-throughs, not corporations. That means their profits are passed through to the owners, shareholders and partners, who pay tax on them on their personal returns under ordinary income tax rates.

The House bill simply dropped the top income tax rate on pass-through income to 25% from 39.6%, while prohibiting anyone providing professional services (e.g., lawyers and accountants) from taking advantage of the lower pass-through rate.

But the Senate bill would let most pass-throughs deduct 17.4% of their income.

The 17.4% deduction would be prohibited for anyone in a service business -- except those with taxable incomes under $500,000 if married ($250,000 if single).

Prevent abuse of pass-through tax break: If the owner or partner in a pass-through also draws a salary from the business, that money would be subject to ordinary income tax rates.

But to prevent people from recharacterizing their wage income as business profits to get the benefit of the pass-through deduction, the Senate bill would automatically limit the deduction to half of the W-2 wages of the pass-through entity or its share to the individual taxpayer. The W-2 rule would not apply, however, if the filer's taxable income is under $500,000 if married, $250,000 if single.

Change how U.S. multinationals are taxed: Today U.S. companies owe Uncle Sam tax on all their profits, regardless of where the income is earned. They're allowed to defer paying U.S. tax on their foreign profits until they bring the money home.

Many argue that this "worldwide" tax system puts American businesses at a disadvantage. That's because most foreign competitors come from countries with territorial tax systems, meaning they don't owe tax to their own governments on income they make offshore.

The Senate bill proposes changes to move the U.S. to a territorial system. It also includes a number of anti-abuse provisions to prevent corporations with foreign profits from gaming the system.

And it would require companies to pay a one-time low tax rate on their existing overseas profits -- 10% on cash assets and 5% on non-cash assets (e.g., equipment abroad in which profits were invested). Those are below the 14% and 7% repatriation rates called for in the amended House bill.

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