Trump Tax Reform
In our previous blog, we informed you about the significant change President Trump propose for tax. This week, the White House unveiled a plan to overhaul the U.S. tax code. The Trump tax reform drastically changes individual and business tax laws. Here are some key changes that will impact you.
Individual Tax Brackets
* Reduced individual tax brackets from seven to three
* New individual tax brackets of 12%, 25%, and 35%
* 12% lowest rate is higher than 10% currently in place, but people paying 10% now may not own any tax under the new plan
* No changes to capital gain and dividend tax rates
* Income levels for each bracket are not disclosed right now
Individual Deductions
* The deduction would grow from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples
* Eliminates deduction for state and local tax
* $500 deduction for non-children dependents
* Bigger child tax credit
* Retains mortgage interest deduction
Personal Exemption
* Eliminates personal exemption
* In 2016, personal exemption was over $4000 per person
Corporate Tax Rate
* Reduces highest tax rate from 35% to 20%
* Tax rate for businesses reported on individual tax return will be 25%
* Limits deductions for interest
Other changes
* Repeal estate tax
* Current estate tax only applies to individuals with estates over $5.49 million (married couple over $10.98 million)
Many details are still not announced. We will keep you informed as more details become public. Call us if you have questions on how the tax reform impacts you.