I still shake my head in disbelief that Donald J. Trump will be moving into the White House in January. It’s a funny thing what American politics has turned into.
Whether you voted for him or not, he is our President-elect and it’s important to understand some of the ways we may be directly impacted by his presidency.
Because of the circus that the campaigns became, very few of us actually looked at the policies of the candidates. And if the Trump team follows through on their plan, it looks like most Americans, even poor and middle-class, will end up paying less income tax each year.
Here are 7 proposed changes that we can expect to see with Trump’s Tax Plan.
1. Individual Income Taxes
His plan will generally lower income tax rates, while completely eliminating certain other tax categories and the number of income tax brackets will be reduced from seven down to just three.
- Income less than $75,000 for married filing jointly (or $37,500 for single filers) – 12%
- Income greater than $75,000 but less than $225,000 for married filing jointly (or between $37,500 and $112,500 for single filers) – 25%
- Income greater than $225,000 for married filing jointly (or more than $112,500 for single filers) – 33%
2. Obamacare Tax on Investment Income
This tax that currently imposes a 3.8% tax on investment income, created to help fund the Affordable Care Act, will be eliminated under Trump’s plan.
3. Death or Estate Tax
While it will essentially be eliminated, the new plan will be subject to capital gains held until death and valued at over $10 million, vs the current $5.45 million.
4. Individual Deductions
There will be significant changes in this area, including an increase in the standard deduction for both married and single persons and the elimination of personal exemptions.
- Standard Deduction - Increase to $30,000 (from $12,600) for married couples and $15,000 (from $6,300) for single filers.
- Personal Exemptions - This will be eliminated under the proposal but the general idea is that they will be included in the higher standard deduction that will be put into place.
5. Head of Household
This would be eliminated under Trump’s proposal.
6. Child Care
Trump’s plan includes both an “above the line” deduction for children under the age of 13 as well a rebate for the expense of childcare for taxpayers under a certain threshold.
7. Business Income Taxes
The business tax rate will fall from the current 35% down to 15% as well as eliminate the corporate alternative minimum tax.
While these are just a few highlights of Trump’s proposed tax changes, you can read more from these sources: