Trump scored a first major legislative win after more than 10 months in office following the Senate’s approval of the biggest U.S. tax overhaul in three decades “Tax Cuts and Jobs Act,” with a 51-49 vote. The move has brought Republicans closer to finalizing the $1.5 trillion tax reform by the end of the year.

The Senate bill differs from the tax bill passed by the House in mid-November on various fronts. We have highlighted some of the major differences:

1.  Both bills reduce the corporate tax rate from 35% to 20% while the House cuts it immediately, the Senate delays the cut till 2019.

2.  The House bill shrinks the current income tax brackets from seven to four: 12%, 25%, 35% and 39.6% while the Senate version keeps the current seven tax bracket: 10%, 12%, 22%, 24%, 32%, 35%, and lowers the top rate to 38.5%.

3.  The Senate bill repeals Obamacare’s individual mandate, which will leave 13 million lesser insured over the next decade. On the other hand, the House bill does not touch this aspect.

4.  The House bill repeals the current medical expense deduction while the Senate aims to keep the medical expense deduction in place with a lower floor of 7.5% for tax years 2017 and 2018.

5.  The House bill also has a provision to repeal deductions for student loans and other education expenses as well as estate tax. The Senate bill on the other hand keeps education deductions intact while increases the estate tax exemption to above $10 million each year after next year, and eliminates it after six years.

6.  Apart from these, there are differences in standard deduction plans, mortgage interest deduction, child tax credit, and other items.  

However, both are likely to negotiate to reconcile their respective bills before the signature from the president, which is expected by Christmas. The massive tax cuts will create an economic surge, boosting job growth in manufacturing and other sectors. Additionally, a lower tax rate would result in better corporate earnings and strong buyback activities.