Republicans narrowly pushed a tax bill through the House Thursday that would slash corporate and individual taxes while preserving and even expanding key benefits for farms. 

The bill, approved 227-205 with no Democratic support, would significantly change the rules for partnerships, S corporations and sole proprietorships while also lowering tax rates on such pass-through businesses. 

The bill also includes a number of other provisions sought by farm groups, including an expanded Section 179 expensing allowance and a small-business exemption that would allow producers to continue deducting interest on their loans. 

The legislation, which would reduce federal revenue by $1.5 trillion, also would double the estate tax exemption, currently $5.5 million per individual, and repeal the tax after 2023. 

Tax reform "will help the economy, it will help our producers, and I think this is a great step in the right direction.” said House Agriculture Chairman Mike Conaway, R-Texas.

Zippy Duvall, president of the American Farm Bureau Federation, said the House action "puts us one step closer to a tax code that works for all farmers and ranchers. Lower rates combined with the preservation of small business expensing, like-kind exchanges and the business deduction for state and local taxes are just a few of the things we are pleased to see in this legislation."

Meanwhile, the Senate Finance Committee late Thursday approved on a party-line vote its version of the bill, which differs from the House measure in key respects, in part because of a procedural rule that will force Republicans to reduce the bill's cost in order to enact it over Democratic opposition. 

The bill would  sunset all of the bill’s individual tax changes, including its pass-through rules and higher estate tax exemption. The measure also would repeal the individual health care mandate in the Affordable Care Act. 

Senate Majority Leader Mitch McConnell, R-Ky., said he would put the "must-pass legislation" on the Senate floor after the week-long Thanksgiving break.

However, it's not clear whether McConnell has the necessary 50 votes to pass the bill. Sen. Ron Johnson, R-Wis., came out against the bill this week, citing concerns with the pass-through provisions for small businesses and farms. Johnson believes both the pass-through income is treated unfairly in both the House and Senate bills. 

There are 52 Senate Republicans, so McConnell can lose just two of GOP votes and still pass the bill, with Vice President Mike Pence as the tie-breaker.

Thirteen Republicans voted against the House bill. They are mostly from states that would be hit by the bill’s limitation on state and local tax deductions. 

Democrats charge that the benefits in both bills are skewed toward wealthy individuals and corporations. Democrats also complained that the bill would end renewable energy credits that subsidize wind and solar power expansion.

Republicans “are borrowing $2.3 trillion over 10 years for the purpose of giving a tax cut a the very top of our economic system,” said the top Democrat on the House Ways and Means Committee, Richard Neal, referring to the amount that the federal budget deficit would be increased when interest on the debt is included. 

The top Democrat on the House Agriculture Committee, Collin Peterson of Minnesota, criticized a number of provisions, including the bill's pass-through rules, which he said would "create a more complicated system for pass through entities that I believe will be abused and spawn tax shelter businesses."

Democrats also say that the deficit increase would inevitably lead to efforts by Republicans to cut Social Security, Medicare and other entitlement programs. Republicans claim the reduction in the corporate tax rate from 35 percent to 20 percent and other tax cuts would promote economic growth and raise enough additional revenue to close all or some of the deficit. 

Ways and Means member Devin Nunes, a Republican who represents part of California’s Central Valley, said tax reform would benefit “small business across rural California, from the small, family-owned farm to the neighborhood restaurant and any other entrepreneur.”

Agriculture Secretary Sonny Perdue also applauded passage of the House bill. “We haven’t had an overhaul of the burdensome federal tax code since the mid-1980s and it is well past time to provide needed relief to workers and families. The people of agriculture dedicate their lives to putting food on the table for their fellow citizens and they deserve to keep more of what they earn from their labors," he said. 

Farm groups got most of what they wanted in the House bill except that it would repeal the Section 199 manufacturing deduction that farmer cooperatives often pass on to their members. The Senate bill also would kill Section 199 deduction, but the bill would ensure that a new deduction for pass-through members would replace the lost income to co-op members, according to Senate Agriculture Chairman Pat Roberts, a senior member of the Finance Committee. 

The National Council of Farmer Cooperatives said the change wouldn't fully replace the Section 199 deduction and was seeking additional help. 

The House and Senate bills also differ markedly in how they treat pass-through income, which is currently taxed at individual rates, which range from 10 percent to 39.6 percent. 

The House bill would set a top rate of 25 percent on the 30 percent of pass-through income that could be classified as a return on capital and also would phase in a minimum rate of 9 percent. The Senate bill would leave pass-through earnings subject to individual tax rates but would create a new 17.4 percent deduction for some wage income.

The Senate deduction would end after 2025 along with the other individual tax provisions. 

Other provisions in the bills: 

-The House bill would temporarily increase the Section 179 expensing allowance, for both new and used equipment, to $5 million with a phaseout at $20 million. Those amounts would be indexed for inflation, but the provision would expire at the end of 2022. The Senate bill would permanently increase the  allowance to $1 million, with phaseout at $2 million, but would continue to limit the provision to new equipment. 

-The House bill would allow farms and business with less than $25 million in annual sales to continue to deduct interest expenses. The Senate bill has a lower threshold, $15 million, but would provide an exemption to livestock operations that agree to a longer depreciation schedule. 

-Both bills would restrict the Section 1031 like-kind exchanges to real property. They’ve also been used in the past for equipment. 

Read a detailed comparison of the bills here

(Updated at 10:45 p.m. with the Senate committee action.)