President Donald Trump signed major tax reform legislation Friday, following approval earlier in the week by the Senate and House of Representatives.
Both chambers voted along party lines, with the Senate approving it 51-48 and the House voting 224-201, with all Democrats opposed.
The changes become effective in January 2018, including permanently lower rates for corporations, which will now pay 21% instead of the current 35%. Lower tax rates for individuals expire in 2025.
Partnerships, including real estate and private equity firms, gained a 20% deduction for pass-through business income until Dec. 31, 2025. The ability of private equity firms to deduct debt interest was lowered to 30% of adjusted income from the current 100%. Partners in private firms kept the ability to pay a lower capital gains rate on carried interest if investments are held for at least three years.
At a White House press briefing Thursday, a senior administration official said the tax cuts are meant to provide about $5.5 trillion in tax cuts, with nearly 60% going directly to American families. "I think the charge that it benefits the wealthy was upended almost immediately when a number of major employers across this country, many who were headquartered in states where the senators did not vote for the tax cuts package, went ahead and said that they would invest in their workforce," he said.