President-elect Donald Trump is proposing the largest tax cuts for Americans since Ronald Reagan. If Trump were to get most of what he wanted from a Republican-controlled Congress, a taxpayer who earns between $48,000 to $83,000 a year would save about $1,000 under the proposed plan, People in the top 0.1 percent, making $3.7 million or more in a year, would receive $1 million in annual tax savings. “He is going to give tax cuts to the very people he ran against in his campaign. If Trump sticks to his campaign promises, here are the some of the most important things his administration wants to change on individual taxes.

Trump proposes to slash seven federal tax brackets to three with rates of 12 percent, 25 percent, and 33 percent. The top rate would fall from 39.6 percent to 33 percent that would cause Increases in the standard deduction from $6,300 to $15,000 for individual filers and from $12,600 to $30,000 for married couples filing together and would end wind-up personal exemptions. Cap itemized deductions at $100,000 for single filers and $200,000 for married couples filing jointly. Eliminate the 3.8 percent tax on net investment income on people who have a modified adjusted gross income of over $200,000 for single filers and $250,000 for married couples filing jointly.

Abolish the substitute minimum tax and the estate tax. Trump has also proposed taxing income from carried interest at ordinary income tax rates, which will not only affect hedge fund managers but high earners with investment income, said Joshua Milgrim, a tax partner in Dechert’s New York office. Trump has proposed no net spending reductions to offset his tax plan’s $7 trillion increase in the debt, according to the Committee for a Responsible Federal Budget’s estimates. “I’m guessing Trump is going to care less about the details than just getting tax reform passed,” said William Gale, co-director of the Tax

According to Howard Wagner, people should expect significant tax changes under a Trump administration, managing director at Crowe National Tax Services. In the minds of the group, tax reform would be brought down to a question of whether there was going to be a repatriation holiday or something. But probably the answer would have been that none of that was going to happen,” says Gardner. If the tax reform plan of candidate Trump were fully enacted, the proposal would cut federal revenue by $4.4 trillion over the next decade on a static basis under one set of assumptions, or $5.9 trillion under another, according to an  analysis of the Trump tax plan by The Tax Foundation, a non-profit tax research organization based in Washington, D.C.

Related Pages

Tags: , , , , ,