Recently, the Trump administration began releasing details of a new tax reform plan. While details are still being negotiated, below is an overview of some of the proposed changes.
– The business tax rate would decrease from 35% to 15% for corporations, and pass-through entities top rate would decrease from 39.6% to 15%.
– There are currently 7 individual tax rates, and the proposed plan reduces this number down to 3 rates: 10%, 25%, and 35%. The income levels these rates would apply to have not yet been determined.
– The standard deduction would be doubled, with the intention being that less people will itemize.
– The alternative minimum tax will be repealed.
– There would be some sort of child and dependent care tax relief, but there are not yet specifics on this.
– The 3.8% net investment tax would be repealed.
– The estate tax would be repealed.
– Most “tax breaks” would be repealed, with exceptions being charitable giving, certain provisions involving home ownership (such as the mortgage interest deduction), and retirement savings. The deduction for state and local income taxes would be eliminated.
The Trump administration’s plan is to “get this done this year”.
Paul Neiffer (the Farm CPA) wrote a blog post on how this new tax reform could affect farmers. To read the post, click here.
These are preliminary summary details regarding a complex tax reform and should not solely be relied upon to make a decision. We will keep you posted as more details emerge.
If you have questions related to this new plan, please Contact Us.