Article posted 11/9/16 on www.wealthmanagement.com; Suzanne L. Shier, Benjamin J. Lavin
The people made their decisions and cast their votes, electing President Donald J. Trump and Vice President Mike Pence. Despite the partisan gridlock in our capitol, there is strong bipartisan agreement on the need to reform the federal tax code.
Winning the White House does not necessarily mean the President-elect has an easy path from tax proposal to enactment. Regardless, congressional tax writers and proponents for tax overhaul are optimistically planning to move bipartisan tax legislation forward in early 2017 given the stated support from both lawmakers and the new President-elect.
Trump Administration Tax Plan
The Trump Administration’s Tax Plan would reform the federal tax code by reducing marginal income tax rates for all individuals and businesses, increasing standard deduction amounts, repealing personal exemptions, capping itemized deductions, repealing the individual and corporate alternative minimum taxes (AMT), repealing the 3.8 percent net investment income tax (NIIT) and repealing the federal estate tax. However, as detailed below, some ambiguities still remain, especially with regard to the estate tax and pass-through business income tax proposals.
Individual Income Tax Proposals
- Create three ordinary income tax brackets of 12 percent, 25 percent and 33 percent, maintaining the current capital gains tax rates of 0 percent, 15 percent and 20 percent.
- Increase the standard deduction from $6,300 to $15,000 for single filers and from $12,600 to $30,000 for married couples filing jointly, eliminating personal exemptions.
- Cap itemized deductions at $100,000 for single filers and $200,000 for married joint filers.
- Repeal the individual AMT and the 3.8 percent NIIT.
- Tax carried interest income at ordinary income tax rates.
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Davis & Hodgdon Associates CPAs has been assisting small businesses with tax savings strategies and business services for more than 25 years. Please call us at (802) 878-1963 (Williston) or (802) 775-7132 (Rutland) if you have any questions or if you would like to set up a strategy meeting to discuss your unique tax planning needs prior to December 31.