With Donald Trump now the 45th President and the Republicans controlling the House and Senate, many tax professionals feel we are likely to see a number of tax changes in the year ahead if his campaign plans and promises hold.
Trump’s campaign website was light on the details, but the following are various tax proposals as set forth on Trump’s campaign site. Here is some of what they have proposed:
Federal tax rates and brackets would be simplified down to three versus the current seven today.
Those with a taxable income between $0 and $37,500 ($0 to $75,000 for married filers) would be subject to a 12 percent tax rate, taxable income between $37,500-$112,500 for individuals ($75,000-$225,000 for married filers) would be subject to a 25 percent rate, and those with taxable income above $112,500 ($225,000-plus for married filers) would be subject to a 33 percent federal tax rate.
The standard deduction would more than double to $15,000 for single filers to $30,000 for married couples filing jointly while ending personal exemptions.
Itemized deductions would be capped at $100,000 for single filers and $200,000 for married couples filing jointly.
Elimination of the 3.8 percent tax on net investment income on people with incomes (MAGI) of over $200,000 for single filers and $250,000 for married filers.
Tax rates on long-term capital gains would be kept at the current 0 percent, 15 percent and 20 percent.
A full repeal the alternative minimum tax (AMT) and the estate tax. Under existing law, estates valued at more than $5,490,000 are subject to a 40 percent tax rate.
The individual mandate (or Obamacare tax as some call it) would also be repealed in 2017, meaning that penalties would not result if people don’t have health insurance.
All final plans will need to be approved by Congress.
Many times, to get wide scale tax reform passed across all branches of government, there are compromise tax plan agreements.
Our goal is to keep watching these tax changes as they progress.
• Mike Piershale, ChFC®, RFC® is President of Piershale Financial Group. If you have financial questions on this column contact us at Piershale Financial Group, Inc., 407 Congress Parkway, Crystal Lake, IL 60014. You may also email Mike@PiershaleFinancial.com