Overview of Trump’s Upcoming Tax Plan (In Case You Don’t Already Know)
As January 20th comes closer to President Elect Trump taking over office, America must prepare for the new changes that he will make in the country. The changes we would like to discuss is the US Federal income tax system that he will implement. In this case, Trump has promised that he will make the tax system easy to understand for individuals.
According to Jane Beule, owner of Griffin Black Financial Services, there is going to be a simplified tax bracket for Personal Income Taxes. Here is what we can expect to see:
“First, expect a simplification of the tax rate structure along with an elimination of the highest personal income tax brackets along the following lines:”
Current (Marred Filing Jointly)
10% bracket: $0 to $18,550
15% bracket: $18,550 to $75,300
25% bracket: $75,300 to $151,900
28% bracket: $151,900 to $231,450
33% bracket: $231,450 to $413,350
35% bracket: $413,350 to $466,950
39.6% bracket: $466,950 or more
Proposed (Married Filing Jointly)
12% bracket: $0 to $75,000
25% bracket: $75,001 to $224,999
33% bracket: $225,000 or more
The 3.8% Obamacare tax on the lesser of net investment income or the amount by which your AGI exceeds $200,000 would also be eliminated under both the Trump and the House plans.
In addition, current tax proposals seek to simplify the calculation of net taxable income by:
- Substantially increasing the standard deduction (from $12,600 to $30,000 for joint filers; $6,300 to $15,000 for singles);
- Eliminating the personal exemption;
- Eliminating all itemized deductions other than for mortgage interest and charitable deductions;
- Capping itemized deductions at $200,000 (joint) or $100,000 (single); and
- Scrapping the alternative minimum tax altogether.
What does this all mean?
With these new proposals in mind, low-income taxpayers earning less than $18,500 would move from a 10% Bracket to a 12% tax bracket and couples earning between $225,000 to $231,450 will pay higher tax because they would be placed in the 33% tax bracket. However, if there is a larger deduction for a “large percentage of these taxpayers would mean a larger proportion of their income would be excluded altogether from taxation than is currently the case, thus maintaining or even reducing their overall effective tax rate”
“Most higher-income taxpayers would see their federal taxes reduced, particularly those who earn more than $466,950, who would see their marginal bracket fall from 39.6% to 33%. Eliminating the 3.8% tax would provide tax relief for all taxpayers earning more than $200,000.
All taxpayers would benefit from not having to deal with the complexities of the Alternative Minimum Tax.”
** Article Based on “How to Prepare for Trump’s Tax Plan Now” written by Jane Beule of Griffin Black **