This month’s Tax Tips address the details of the President’s recently-suggested tax overhaul plan. Please keep in mind the following information is part of a proposed plan and none of these changes have been passed by Congress. Tax team members Jamie Templer and Stuart Cooksey discuss the major changes in the tax framework and how they may affect taxpayers. Click here to view.
Yesterday, President Trump unveiled the details of his administration’s tax overhaul plan. We are going to take a few minutes to discuss the major changes in the tax framework and how they may affect you. Please keep in mind the following information is part of a proposed plan and none of these changes have been passed by Congress.
First, we will discuss the proposed changes to corporate tax structure. The biggest change will be the lowering of the corporate tax rate from 35% to 20%. There will also be a new tax on passthrough income that is limited to 25%.
The plan is doing away with corporate Alternative minimum tax. The Domestic Production deduction is being cut. Meanwhile, certain credits are kept in place- including R&D credits and low income housing credits.
President Trump is also encouraging businesses to bring foreign investments back into the United States. The plan exempts foreign earned profits when brought back into the US. (Including Accumulated earnings) and 100% exemption for dividends from foreign subsidiaries.
There are a lot of proposed changes to personal taxes as well. Previously, individuals have been taxed in seven brackets- ranging from 10% to 39.6%. Under the new plan, there will be three tax brackets
- And 35% as the top tier
- The plan also gives congress an option to add a bracket higher than 35% if necessary
The new standard deduction will be almost doubled. Previously, the standard deduction was $6,350 for an individual. It would now be $12,000 for individuals and $24,000 for married couples filing a joint return. Personal exemptions would be eliminated.
Some itemized deductions would be eliminated. The most significant of these would be the elimination of state and local taxes as an itemized deduction. Deductions for mortgage interest and charitable giving would stay in place.
If you have any questions or need assistance planning for future changes, we here at Crosslin are happy to help you out. Please give us a call.