Trump and Your Taxes – Changes are Coming December 2, 2016
First off, it’s important to understand that it’s unlikely all of Trump’s tax proposals will come to pass. Regardless, there are a couple big takeaways to consider given the potential scale of impending tax changes and the high probability tax rates will be lower soon;
1. Discuss deferring whatever income you can into the future with your CPA or tax attorney.
2. If you have any deferred deductions, talk with your tax professional about taking them in 2016.
So, what will Trump push for?
• Corporate tax rates capped at 15%. This would go with a reduction or even the end of many deductions and credits. AMT to be eliminated. Additional changes to business taxes including advantages to manufacturing in the US and exclusion of employee childcare expense from income.
• One time repatriation tax for corporations holding $ overseas at 10% rate.
• Individual tax rates would be simplified into 3 brackets:
o Less than 75k: 12% for Married-Joint filers.
o $75k to less than $225k: 25% for Married-Joint filers.
o $225k +: 33% for Married-Joint filers.
o Brackets for individual filers to be ½ the above.
* Increase in standard deductions;
o More than doubles deduction for married joint filers to $30,000.
o Single filers get deduction of $15,000.
o Exemptions to be eliminated.
• Death/Estate Tax to be eliminated, but capital gains held until death in excess of $10 million will be subject to tax. To exempt small business and family farms.
• Significant changes to childcare and elder care deductions for most Americans. Excludes couples over $500k AGI/$250k single. Rebates available to taxpayers under $62.4k MFJ and $31.2k single. Proposes a tax exempt Dependent Care Savings Accounts.
• Capital Gains to stay at 20%.
Trump’s team estimates this will result in 3% reduction in tax bill for the highest earners, to a 35% reduction for the lowest. More information on the President-Elect’s proposals available at www.donaldjtrump.com
The Urban-Brookings Tax Policy Center sees most payers experiencing a reduction, but there are instances where the marginal rate actually increases.
To read the full analysis follow this link: Urban-Brookings Tax Policy Center
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