Apr 27 Tax Alert: Breaking Down the Trump Tax Proposal
The White House issued “core principles” of its proposed tax reform plan yesterday, echoing many of the promises President Trump made during his campaign. While the plan leaves some questions unanswered – including how or if it will be funded – and will undoubtedly face challenges in Congress, an overview of the proposal reflects the potential for some of the biggest tax cuts in American history.
If Trump’s proposal passes, businesses would experience:
- Reduced tax rate of 15 percent for small and mid-size businesses
- One-time repatriation tax on offshore earnings that U.S. companies have overseas
- Introduction of territorial tax regime, wherein U.S. companies would be taxed only on income related to U.S. activities, and not worldwide income
For individual taxpayers, the proposed plan would:
- Condense seven income tax rates to three (10%, 25% and 35%)
- Double the standard deduction (i.e. $24,000 for married couples)
- Repeal all itemized deductions except home mortgage interest and charitable contributions
- Bring unspecified tax relief for families with child and dependent care expenses
- Abolish the estate tax (which currently affects estates worth more than $5.49 million for individuals and $10.98 million for couples)
- Repeal the alternative minimum tax (AMT)
- Eliminate the net investment income (NII) tax
The administration once again expressed its determination to enact this tax overhaul before the end of 2017. Sax will keep you advised of new developments as they happen. For more information, contact your Sax advisor at (973) 472-6250.