Over the weekend, the Senate voted on a tax bill that cuts tax rates, eliminates the estate tax and increases certain business deductions but limits or eliminates other tax breaks. The House passed a similar tax plan Nov. 16.

The goal was a finished bill before Christmas, and Republicans are confident they can quickly reconcile the differences with the House version and send it to the president’s desk by then.

Both measures, which will need to be reconciled, would create new pass-through tax rates, reduce rates for subchapter C corporations and consolidate individual tax rates.

The House bill proposed four tax rates: 12%, 25%, 35% and 39.6%. The Senate bill would keep seven tax brackets and reduce the top marginal rate to 38.5%.

Welcomed by those in ag, it also eliminates the Alternative Minimum Tax (AMT), expands the bonus depreciation deduction for certain assets and increase the deduction for Section 179 equipment.

For property taxes, current tax code allows if you itemize your deductions, you can deduct state and local property taxes. Under both the House and Senate bills, the property tax deduction would remain in place but would be capped at $10,000.

The Senate version increases the exemption from and eventual repeal of the estate tax while retaining stepped-up basis. The House version offered a full repeal.

Related:Inside Washington: How tax bill could impact farm bill spending

“We applaud the Senate’s commitment to key tax provisions farm and ranch businesses depend on, such as immediate expensing, business interest deduction and cash accounting. While we also had hoped to see the estate tax finally put to death, increasing the exemption should bring relief for many farm and ranch families looking to preserve their agricultural legacy," said Zippy Duvall, president at the American Farm Bureau Federation.

Both bills eliminate Section 199 – the Domestic Production Activities Deduction – which limits business interest expense deductions for larger businesses and eliminate the net operating loss carryback provision.

A total of 179 agricultural groups signed onto a recent letter urging House Speaker Paul Ryan, R-Wis., and Minority Leader Nancy Pelosi, D-Calif., to retain Section 199, which is used by many agricultural co-ops.

The support Section 199 provides to rural communities is critical, the National Council of Farmer Cooperatives said. “In fact, farmer cooperatives pass 95% of the benefit—nearly $2 billion nationally—directly back to farmers across rural America. Farmers can then deduct their share of the Section 199 benefit from their farms’ tax burden,” according to a coalition of organizations urging Congress not to eliminate the change.

Sen. John Hoeven, R., N.D., filed an amendment, although it was not agreed upon, along with cosponsoring Sen. Jerry Moran, R., Kan., John Boozman., R., Ark., Tom Cotton., R., Ark., Cory Gardner., R., Colo., Joni Ernst, R., Iowa, Roy Blunt, R., Mo., James Risch., R., Idaho, and Mike Rounds., R., S.D., that would retain Section 199 for farmer cooperatives, preventing a tax increase on farmer members. 

Ahead of the Senate vote, House Speaker Paul Ryan (R., Wisc.) released a statement making assurances that PAYGO would be waived following passage of tax reform in order to avoid sequestration cuts that would otherwise make deep cuts to Medicare and wipe out non exempt mandatory spending programs, including PLC and ARC. The assurances offered by GOP leadership are intended to assuage concerns of farm groups worried that automatic sequester cuts would otherwise kick in to pay for tax cuts.

The National Farmers Union (NFU) has been “staunchly opposed” to the bill because it would reduce the federal deficit by $1.5 trillion, and also would “jeopardize funding for farm safety net programming, and shift the nation’s tax burden from wealthy corporations and individuals to the rest of us, and to our children and grandchildren.”