is now 
President-Elect Donald Trump’s tax plan promises to take a hatchet to the current tax code affecting individuals and businesses alike. Experts and analysts have varied views about what his administration will do and how soon, but they agree that the Republican control of both the House and Senate will enable faster action and more radical moves.
Comprehensive tax plans which would reduce tax rates for individuals and businesses while eliminating many deductions and tax breaks have been in the works, but politics prevented their introduction. Because most of this legislation has already been written, pulling together the plans into a Trump-approved tax bill for debate could happen at lightning speed.
Considering ordinary income taxes only, the current tax code charges individuals complicated graduated tax rates from 10% to 39.6%. Trump’s proposal includes only three individual income tax brackets: 12%, 25% and 33%. Itemized deductions would be capped or no longer allowed and personal exemptions would be eliminated.
Under the Trump tax plan business taxes would be slashed and corporations would pay 15% instead of 35% on earnings. A more simplified tax structure would eliminate most business deductions including interest on debt. Depreciation of assets would also be calculated differently through a more limited and simplified tax code.
Trump plans to eliminate estate taxes which currently charge 40% tax on assets above $5.45 million. His plan would still allow an income tax on the appreciation inherent in the assets for larger estates that would be paid when the assets are sold by the beneficiary.
America’s new President is set to be sworn in January 20th. In the footsteps of two former Presidents, John F. Kennedy and Herbert Hoover, as billionaire real estate mogul Trump has opted to forego the annual Presidential salary of $400,000. He is quickly putting together a team of lawmakers who will fulfill his campaign promises to slash taxes and repeal major provisions of the Affordable Care Act (see more below in “2017 Tax Rates (If Nothing Changes)”) among his first days in office.
This is a good time to review and understand your options. Contact us now to confirm your year-end tax planning session and we’ll help you determine the best tax strategy during changing times.
