How the Trump Presidency Could Affect Your Taxes
By Gail Rosen, CPA, PC –
November 17, 2016
President-Elect Donald Trump has proposed large tax cuts that may have a major impact on your taxes. It is uncertain whether these changes can move forward quickly enough to be considered for 2017. Republicans maintained a majority in both chambers of Congress in the election, helping to support his proposed tax changes. We will continue to monitor these proposed changes and inform you of any beneficial tax planning strategies.
Trump's proposed tax plan includes the following:
- There are currently seven federal tax brackets that range from a tax rate of 10 to 39.6 percent. President-Elect Trump proposes to condense these seven tax brackets down to three brackets of 12, 25 and 33 percent. The tax on long-term capital gains would be kept at the current rates of 0, 15 and 20 percent.
|Current Individual Income Tax Plan — Single
||Current Individual Income Tax Plan — Married
|Trump's Individual Income Tax Plan — Single
||Trump's Individual Income Tax Plan — Married
- He wants the current standard deduction increased from $6,300 to $15,000 for singles and from $12,600 to $30,000 for married couples filing jointly.
- Itemized deductions would be limited to a maximum of $100,000 for singles and $200,000 for married couples filing jointly.
- The 3.8 percent tax on investment income would be eliminated. This additional tax currently affects taxpayers who have adjusted gross income over $200,000 for single filers and $250,000 for married couples filing jointly.
- The Alternative Minimum Tax would be eliminated.
- Estate and gift taxes would end.
- There would no longer be an option to use head of household filing status.
- A new deduction for child and dependent care expenses would be created.
- Tax rates for corporations would be cut from the current top rate of 35 to 15 percent. Certain business tax loopholes would be eliminated.
- Businesses that are set up as S corporations, partnerships or sole proprietorships, (including single and multi-member LLC's) would pay tax at 15 percent and would likely pay a second layer if the owner takes the money out of the business.
Gail Rosen, CPA, is a partner with Wilkin & Guttenplan.