An Update on Trump’s Tax Plan
Posted on: February 1, 2017
Las
t week I attended a tax seminar organized by McLean Estate Planning Council. The keynote speaker was a CPA and lobbyist for the AICPA on Capitol Hill. He is privy to Trump’s tax reform plan and a number of other Republican tax reform plans. These plans have a long way to go to become law, but the contour is taking shape so I thought I would share what I learned with you in a few bullet points. Note that I bolded the parts that may be disadvantageous to taxpayers.
t week I attended a tax seminar organized by McLean Estate Planning Council. The keynote speaker was a CPA and lobbyist for the AICPA on Capitol Hill. He is privy to Trump’s tax reform plan and a number of other Republican tax reform plans. These plans have a long way to go to become law, but the contour is taking shape so I thought I would share what I learned with you in a few bullet points. Note that I bolded the parts that may be disadvantageous to taxpayers.On personal income tax:
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The number of tax brackets will be reduced from seven to three, and the top marginal income tax rate will be reduced from 39.6% to 33%.
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Personal exemptions will be eliminated.
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Standard deduction for married filing jointly will rise from $12,600 to $30,000.
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Itemized deductions will be capped at $200,000 per household.
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Mortgage interest deduction will be eliminated.
Overall, taxpayers will get a tax break. However, there are some taxpayers who will end up with a tax increase.These are folks with many dependents, who have a huge mortgage or who give a lot to charities.
On corporate income tax:
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Tax rate will be reduced from 35% to 25%.
On payroll tax:
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Social security wage base will increase significantly from the current $118,500, though the final number is not yet known.
On estate tax:
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Estate tax will be eliminated, but not gift tax.
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Inherited property basis step-up will be eliminated as well. That means that when you sell a property you inherited from your grandpa, the tax basis (to calculate capital gain tax) of the property will not be the time you inherited it but the time your grandpa bought it. The CPA commented: “This has the potential of creating an impossible record discovery burden.”
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