Change in Taxes With Trump Presidency?

Now that Trump will become President and the Republican Party is now in control of both Houses in Congress, you can be sure that changes are coming. A few provisions of Trump’s tax plan follow:

1. Married joint filers: less than $75,000- 12%, $75,000-$225,000- 25%, above $225,000- 33%.
2. Single filers- 50% of the above.
3. Repeal of Affordable Care Act.
4. Repeal of alternative minimum tax (“AMT”).
5. Standard deduction for married filers- $30,000, single filers- $15,000.
6. Elimination of personal exemption and head of household exemption.
7. Repeal of estate tax.
8. Capital gains on property held until death and valued  over $10 million would be subject to tax, with small business and family farms being exempt.
9. Reduction of business tax rate from 35% to 15%.
10. Elimination of corporate AMT.
11. Increase in child care tax credits.

The House Republicans have also released “A Better Way- Our Vision For A Confident America” which contain a number of tax reforms. A few provisions follow:

1. Reduce the tax rate to 33% and the number of brackets.
2. Eliminate the AMT.
3. Simplify tax benefits for higher education.
4. Eliminate all itemized deductions except for mortgage interest deduction and charitable contribution deduction.
5. Repeal estate and generation skipping transfer tax.
6. Reduce corporate tax rate to 25%.
7. Repeal the Affordable Health Care Act.

Obviously, nothing is clear other than change is coming. We will have to wait and see what happens in the future.

ADVICE:  Keep up with the news to see changes in the tax law. If you subscribe to this blog, you will receive information. Also, be sure to contact your CPA and attorney if changes are made. Any changes will affect your tax planning  and your estate planning.

WORD OF THE WEEK: Alternative minimum tax (“AMT”) is an “alternative” tax calculated at the same time as your regular tax. You pay the higher of your regular tax or the AMT. If the AMT applies to you, you may lose many credits or deductions you would normally receive if you didn’t have to pay the AMT.

The AMT was created to keep the wealthiest taxpayers (and corporations) from using loopholes or big deductions to avoid paying a minimum amount of taxes. However, until 2013, the tax has never been indexed for inflation, so as wages increased, the AMT to affect more middle class Americans. The best way to see how close you are to paying the AMT is to look at Form 6251 from your last year’s tax form.

Individuals most likely to pay AMT have income over $100,000 and very large deductions, such as high local, state, or property taxes, major medical bills, high child care credits, second mortgage interest or home equity lines of credits to finance college costs or consolidate debts, or large long term capital gains.

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