House passage of a tax overhaul Thursday was just the first step. Many changes are expected before a bill reaches President Donald Trump's desk. First, the Senate has to pass tax legislation. Then the two chambers will form a conference committee and reconcile a litany of differences, after which the House and Senate will have to vote on that bill. What to watch as the tax bill continues its journey:
Individual mandate: The provision that has probably drawn the most attention in recent weeks is less about taxes than it is about health care — the effective repeal of the 2010 Affordable Care Act's individual mandate. The Senate — in need of some revenue — decided to add a repeal of the individual mandate to its bill. This was not in the House bill, and it could cause some of the moderates who voted "yes" on Thursday to reconsider if it's included in the final measure.
State and local tax deduction: The Senate fully repeals the deduction, which allows taxpayers to deduct property taxes and either state income or sales taxes. The House would eliminate the deduction for state and local income or sales taxes but retain the break for property taxes with a new $10,000 cap. A full repeal is considered fatal in the House.
Individual tax cuts: Where the House and Senate bills most diverge is on the structure of individual tax cuts. The House plan sets up four permanent individual income tax brackets of 12, 25, 35 and 39.6 percent. The Senate has seven brackets of 10, 12, 22, 24, 32, 35 and 38.5 percent that expire after eight years. The Senate approach goes against two main goals of the GOP tax overhaul — simplification and permanency.
Small business relief: A wide gap exists in the bills' treatment of small businesses whose incomes are taxed at their owners' individual rates. These so-called pass-through entities would get some relief under both chambers' measures, but some lawmakers have complained that neither goes far enough.
Mortgage interest deduction: Some House Republicans who voted "yes" Thursday did not like that the bill curtailed the mortgage interest deduction for new home purchases to interest paid on the first $500,000 of debt. The limit is now $1 million. The House bill also got rid of the deduction for second homes. Many of these members hope the Senate position, which keeps the second-home deduction and the $1 million limit, prevails.
Family/child tax credit: Many senators thought the House bill did not go far enough in expanding the current $1,000 child tax credit. The House bill would have created a new family credit: $1,600 for each child and $300 for each parent and non-child dependent, with the latter credit set to expire after five years. The Senate plan proposes a credit of $2,000 for each child and $500 for each parent and non-child dependent, both of which would expire after eight years. The House family credit phases out at $230,000 for joint filers, while the Senate version phases out at $500,000. Some House members believe the money saved by their version could be better used, maybe to make some of the individual tax cuts permanent.
Estate tax: Repealing the estate tax is a high priority for conservative Republicans. The House bill would nearly double the amount exempted from tax, from about $5.5 million currently to $10 million, for seven years, but would fully repeal it thereafter. The Senate plan would also increase the threshold for exclusion by the same amount for eight years, but keep the tax. Full repeal may help retain House votes.
Medical expense deduction: The House bill repeals the deduction for medical expenses, while the Senate keeps it. The provision allows taxpayers to deduct out-of-pocket medical expenses if they exceed 10 percent of their adjusted gross income. Some prefer to keep the deduction, but it remains to be seen whether that would be prioritized over other items that would cost money to retain.
