After the Senate’s vote on the Tax Cuts and Jobs Act in the early hours of Saturday morning, Senate Majority Leader Mitch McConnell (R-KY) told reporters that while he was not predicting that the conference committee with the House would be “a piece of cake,” he was confident that the chambers could reconcile their differences. He cited efforts to “pre-conference” the bill by adopting key House priorities. For instance: “We’ve moved our initial thinking on this in the direction of the House bill, for example the property tax deduction, in order to get the bills closer together than they were.”

That will be important. When the chambers pass different versions of a bill, conferees are appointed by both the House and the Senate to produce a “conference report” that is satisfactory to the majority of conferees from each chamber. (More on this later, after the table.) The closer the two sides are going into conference, the easier the resulting process.

The good news for proponents of the bill is that McConnell is right: the Senate bill moved in the House’s direction on several important issues, and was already identical on key points. Both move to chained CPI. Both retain the state and local tax property tax deduction, capped at $10,000. After a floor amendment adopted last night in the Senate, both expand 529 college savings accounts to apply to some primary and secondary education expenses. Both feature a 20 percent corporate rate. That does not mean, however, that the two versions are identical.

Here are several important ways in which they differ, all of which would have to be resolved in conference committee. Some are modest, while others, like the fate of the alternative minimum tax and the chambers’ competing approaches to the taxation of pass-through business income, are likely to keep conferees busy. This list, while not exhaustive, covers the major differences between the versions that passed each chamber.

Provision House Version Senate Version Individual Income Tax Rates and Brackets Consolidates current seven income tax rates into four, while retaining the top marginal rate of 39.6 percent and including an income recapture provision which phases out the effect of the 12 percent bracket for high earners, sometimes called a “bubble rate” Single Filer Rate Schedule 12% > $0 25% > $45,000 35% > $200,000 39.6% > $500,000 Retains seven brackets while reducing rates, bringing the top marginal rate to 38.5 percent and avoiding a bubble rate; individual income tax rate changes sunset at the end of 2025 Single Filer Rate Schedule 10% > $0 12% > $9,525 22% > $38,700 24% > $70,000 32% > $160,000 35% > $200,000 38.5% > $500,000

Standard Deduction $12,200 for single filers, $18,300 for heads of household, and $24,400 for joint filers, indexed to chained CPI $12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers, indexed to chained CPI Child and Family Tax Credits Increases child tax credit value to $1,600, with the phaseout for joint filers beginning at $230,000, while creating a new $300 per-person family tax credit for those not eligible for the child tax credit, to expire after five years Increases credit value to $2,000, with the phaseout for joint filers beginning at $500,000; provision sunsets at the end of 2025 Medical Expense Deduction Repeals Retains, and for tax years 2017 and 2018, allows it to be taken if eligible expenses exceed 7.5 percent of AGI rather than 10 percent under current law Mortgage Interest Deduction Limits the mortgage interest deduction to the first $500,000 in principal value Keeps the mortgage interest deduction for acquisition debt, but eliminates the deduction for equity debt Graduate Student Income Treats graduate student tuition waivers as taxable income Not included in Senate version Treatment of Pass-Through Income Caps the pass-through rate at 25 percent, then setting anti-abuse rules that begin with the rebuttable presumption that 70 percent of pass-through income is wage income (subject to the regular rate schedule), while 30 percent is business income (subject to the lower rate cap), while excluding many professional service companies from the preferential rate Adopts a 23 percent deduction for pass-through income (limited to 50 percent of wage income) for qualifying businesses, including publicly traded partnerships but with a slightly longer list of ineligible service providers; the provision expires at the end of 2025 Corporate Rate Reduction Timing Cuts rate to 20 percent, effective tax year 2018 Cuts rate to 20 percent, delayed to tax year 2019 Capital Investment Allows full expensing of short-lived capital investment, such as machinery and equipment, for five years; increases the Section 179 small business expensing cap from $500,000 to $5 million, with the phaseout beginning at $20 million, and maintains current depreciation schedules for real property Allows full expensing of short-lived capital investment, such as machinery and equipment, for five years, then phases out the provision over the subsequent five; raises Section 179 small business expensing cap to $1 million with a phaseout starting at $2.5 million, and shortens the depreciation of real property to 25 years Alternative Minimum Tax Repeals both the individual and corporate alternative minimum taxes (AMTs) Retains the corporate AMT in its current form, and retains the individual AMT with higher exemption amounts (about 40 percent higher than current law) Tax Treatment of Interest Caps net interest deduction at 30 percent of earnings before interest, taxes, depreciation, and amortization (EBITDA) Caps net interest deduction at 30 percent of earnings before interest and taxes (EBIT) Net Operating Losses Eliminates net operating loss (NOL) carrybacks while providing for indefinite net operating loss carryforwards, increased by a factor reflecting inflation and the real return to capital, while restricting the deduction of NOLs to 90 percent of current year taxable income Eliminates net operating loss carrybacks while limiting NOL carryforwards to 80 percent of taxable income Cash Accounting Increases small business eligibility for small businesses, from $5 million to $25 million Increases small business eligibility for small businesses, from $5 million to $15 million Business Credits and Deductions Eliminates credits for orphan drugs, energy, private activity bonds, rehabilitation, and contributions for capital, among others Modifies, but does not eliminate, the rehabilitation credit and the orphan drug credit, while also limiting the deduction for FDIC premiums and retaining certain other preferences eliminated in the House version International Income Moves to a territorial system with base-erosion rules including the inclusion of 50 percent of excess returns by controlled foreign corporations in U.S. shareholders’ income, and an excise tax on payments made to foreign firms unless claimed as effectively connected income Moves to a territorial system with anti-abuse rules and a base erosion minimum tax of the excess of 10 percent of modified taxable income over an amount equal to regular tax liability Deemed Repatriation Enacts deemed repatriation of currently deferred foreign profits at a rate of 14 percent for liquid assets and 7 percent for illiquid assets Enacts deemed repatriation of currently deferred foreign profits at a rate of 14.49 percent for liquid assets and 7.49 percent for illiquid assets Estate Tax Increases exemption to $10 million, indexed for inflation, with repeal after six years Doubles the estate tax exemption Individual Mandate Penalty No change Reduces the individual mandate penalty to $0

Unless the House simply accedes to the language that passed the Senate, a conference committee must produce a report which addresses all these differences. The conference report must then be approved by both chambers. Such reports are privileged, meaning that the motion to proceed to consideration of the report is not debatable, and that the report must be considered as-is, without amendments. In the case of reconciliation bills, moreover, there is no filibuster, and debate is limited to ten hours. These rules are all very important to the prospects of a bill that passed the Senate with such a narrow margin. But as that margin shows, there may be scant room to negotiate.

Earlier this morning, McConnell referred to the rounds of negotiations necessary to secure 51 votes as a “Rubik’s cube” of coalition-building. Since Senate leadership can afford to lose one vote at most—and perhaps none should Doug Jones, a Democrat, win the December 12th special election in Alabama and thus turn over that seat before the conference report is voted upon—just about any change could be precarious.

McConnell’s belief that these challenges can be surmounted seems reasonable in light of those both chambers have already overcome, but as with all of the negotiations to date, solving this last Rubik’s Cube will prove a delicate operation.