Donald Trump’s most current tax plan promises to save taxes for most individual taxpayers. One way is the elimination of the alternative minimum tax. What are some other ways? Trump’s tax plan:
- Adapts the current rates for qualified capital gains and dividends to the new brackets.
- Eliminates the head of household filing status.
- Eliminates the Net Investment Income Tax.
- Increases the standard deduction from $6,300 to $15,000 for singles and from $12,600 to $30,000 for married couples filing jointly.
- Eliminates the personal exemption and introduces other childcare-related tax provisions.Makes childcare costs deductible from adjusted gross income up to the average cost of care in their state. The deduction would be phased out for individuals earning more than $250,000 or couples earning more than $500,000.
- Offers credits or “spending rebates” of up to $1,200 a year for childcare expenses to lower-income families through the earned income tax credit.
- Creates new saving accounts for care for children or elderly parents, or school tuitions, and offers a 50 percent match of contributions.
- Caps itemized deductions at $100,000 for single filers and $200,000 for married couples filing jointly.
- Taxes carried interest as ordinary income.
- Eliminates the individual alternative minimum tax.
Instead of the seven tax rates that currently exist, there would be only three tax rates: 12 percent, 25 percent and 33 percent (amounts are taxable income):
| Income Tax Brackets Under the Trump Plan | |||
| Ordinary Rate | Capital Gains Rate | Single Filers | Married Joint Filers |
| 12% | 0% | $0 to $37,500 | $0 to $75,000 |
| 25% | 15% | $37,500 to $112,500 | $75,000 to $225,000 |
| 33% | 20% | $112,500+ | $225,000+ |
Donald Trump’s most current tax plan promises to save taxes for most business and corporate taxpayers. Some of the plan’s provisions will lower the business tax rate from 35 percent to 15 percent, and eliminate the corporate alternative minimum tax. What will Trump’s plan do for business taxpayers? Trump’s tax plan:
- Reduces the corporate income tax rate from 35 percent to 15 percent.
- Eliminates the corporate alternative minimum tax.
- Allows firms engaged in manufacturing in the U.S. to choose between the full expensing of capital investment and the deductibility of interest paid.
- Eliminates the § 199 domestic production activities deduction and all other business credits, except for the research and development credit.
- Enacts a deemed repatriation of currently deferred foreign profits, at a tax rate of 10 percent.
- Increases the cap on the tax credit for employer-provided day care under § 205 of the Economic Growth and Tax Relief Reconciliation Act of 2001 from $150,000 to $500,000 and reduces its recapture period from 10 years to 5.
It is wise to consult with an experienced and knowledgeable tax professional to help any taxpayer in the New York or Tri-State area, whether an individual or business, assess their current tax situation looking ahead to the Trump Administration’s new tax policies. If you have any question about taxes, especially in planning ahead for 2017, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
