TRUMP WON...NOW WHAT?
On January 20, Donald Trump will take the oath of office as the 45th President of the United States. He’ll have the full support of a Republican House and Senate, meaning an end to the gridlock of the past six years. What effect will his inauguration have on your taxes?
- Cut tax brackets to three: 12-25-33% (Currently 7-15-25-28-33-35-39.6%).
- Boost standard deduction to $15,000 for single and $30,000 for joint filers (For 2016 it’s $6,300 and $12,600).
- Eliminate Personal Exemptions and head-of-household filing status.
- New deduction for individual health insurance premiums (Obamacare is to be either amended or repealed).
- Capital Gains: Different rates, some will be better off recognizing long-term gains in 2016 and others after 2016.
- Cap itemized deductions at $100,000 and $200,000 for joint filers.
- Repeal Alternative Minimum Tax.
- Repeal Estate Tax, Trump's tax plan is silent regarding the Gift Tax (new regime may reinstate in the future).
- Repeal stepped-up basis on gains over $10 million.
- Lower the maximum business tax rate from 35% to 15% for corporations; requiring "reasonable compensation to owners."
- Eliminate interest expense deduction for manufacturers who elect to fully deduct capital equipment in the year of purchase.
- One time 10% tax on repatriation of accumulated deferred foreign income.
- Sole-Proprietors, LLC's, Partnerships and S Corporations may elect to be taxed at 15%. This requires "reasonable compensation" and a tax on distributions.
- Repeal most business tax incentives except R&D Credit.
Trump has proposed a conventionally Republican suite of changes: lower rates, new deductions for families, and incentives to repatriate foreign earnings. At the same time, he has proposed to limit certain breaks and cap overall itemized deductions.
I compared Trump's plan with the 2016 House Republican Tax Reform Plan to obtain more details as to what is expected to change. There are many similarities as well as differences between the Trump and House GOP plans.
Are you worried what might happen to your taxes under President Trump?
There are many decisions that you should make prior to 12/31/2016.
Send an email to schedule a Tax Analysis. We’ll tell you where your opportunities lie, and work with you to take maximum advantage of any new rules!