President Trump has unveiled a basic outline for his tax plan, which many of the proposals are similar to those he touted during his campaign. While many of the details are still being negotiated, the basic outline significantly slashes tax rates for businesses and individuals. The White House outline includes the following reforms:
Individual Tax Reform
- Reduce the seven individual income tax rates to three: 10%, 25%, and 35%
- The standard deduction would double
- Repeal the Alternative Minimum Tax
- Repeal the Estate Tax
- Eliminate the 3.8% net investment tax
- Provide tax relief for families with child and dependent care expenses
- Retain the mortgage interest deduction and charitable deduction while eliminating other tax breaks
Business Tax Reform
- Reduce the business tax rate from 35% to 15% for corporations
- Reduce the top tax rate for pass-through business, including partnerships and S-corporations, from 39.6% to 15%
- Implement a one-time repatriation tax on offshore earnings to entice companies to bring back money made overseas (the low tax rate has not been disclosed)
- Move to a territorial tax system; income would be taxed in the country where it is earned
- Eliminate tax breaks for special interests
While President Trump’s plan still lacks all the supporting details, it is clear that the goal is to stimulate job growth, simplify the tax code, and provide tax relief to individuals and businesses. Commenting on the timeframe to implement Trump’s plan, Treasury Secretary, Steven Mnuchin, stated they were determined to “get this done this year.”
If you have questions about President Trump’s tax plan or how these proposed changes may impact you or your business, please contact us.
