(Reuters) - Shares of the biggest U.S. banks rose on Monday, after the Senate approved a tax overhaul bill on Saturday, raising investor hopes that their earnings would get a boost from a significantly lower tax bill.

Slideshow ( 2 images )

JPMorgan Chase rose 2.4 percent to hit a record on Monday, while Bank of America rose 3.5 percent to its highest since October 2008. Both were the top performers on the S&P 500 Index, which was up 0.7 percent.

Mid-cap and regional banks also gained, with KeyCorp, Citizens Financial and M&T Bank Corp rising almost 4 percent. Zions Bancorp and Comerica Inc rose more than 2.5 percent.

“Banks might be the biggest winners from the tax reforms,” Michael Mayo, a senior Wells Fargo analyst said.

Of the major S&P sectors, financials pay the highest effective tax rate at 27.5 percent, a Wells Fargo analysis of historical tax rates showed.

The tax cuts could add 16 percent to median bank earnings in 2018 and 18 percent in 2019, said Brian Klock, managing director in equity research at Keefe, Bruyette & Woods, who covers large regional banks.

Among large regional banks, Zions Bancorp, M&T Bank Corp and Comerica Inc stand to benefit the most, Klock said.

Talks will begin, likely next week, between the Senate and the House, which has already approved its own version of the legislation, to reconcile their respective bills.

While negotiations are ongoing, the legislation could cut the corporate tax rate to as low as 20 percent from 35 percent.

The tax overhaul is seen by President Donald Trump and Republicans as crucial as they head into mid-term elections in November 2018, when they will have to defend their majorities in Congress.

The S&P financial index rose nearly 2 percent to its highest since 2007, while the KBW Bank Index rose 2.7 percent.