One of the topics talked about all year is how our tax system needs to be greatly improved and just this week, President Trump and Republican Leaders released how they think it could be fixed.
In January 2017, PBMares presented The First 100 Hours of the Next Four Years: What a Trump Presidency Means for Hampton Roads, Virginia. Now nine months later, we learn the suggested changes are in-line with many of our original expectations. While those who helped make the plan say the changes will reduce debt, others believe differently.
Below are a few key, and perhaps surprising, suggested changes to both individual and business taxes. The question for many still remains how the reform will affect the working class and how the plan will be paid for. Remember, these are just suggested changes; the plan still has to be approved.
- Create a new $500 tax credit for non-child dependents
- Delete Alternative Minimum Tax and Estate tax
- Double the individual standard deduction to $12,000 and married filing jointly to $24,000
- Increase the child tax credit from $1,000 to an undetermined amount
- Preserve deductions for mortgage interest expenses and charitable giving, education and retirement savings plans incentives
- Reduce the levels of tax brackets from seven to three with rates of 12%, 25% and 35%
- Remove state and local income tax, as well as property tax, as federal tax deductions
Affecting Your Company
- Create a new 25% tax rate for approximately 95% of business who are partnerships and sole proprietorships who are currently taxed at the rate of their owners
- Limit deduction of corporate interest expenses to immediately expense business investments
- Move from a worldwide tax system to a territorial tax system for multinational corporations so companies would not be taxed on their overseas earnings
- Reduce corporate tax rate from 35% to 20%
Remember, this list doesn’t include all of the proposed changes, nor does it mean that those listed above will definitely happen. Stay with PBMares to see what updates are passed and call us directly to find out how we can help you understand how these changes affect you and your business.
The content of this post is accurate as of the date above. Always ensure you are reviewing the most recent information available. Contact your tax advisor if you need clarification.
UPDATE: Read about the house version of the bill released on Nov. 2, 2017, in this post: Congressional Tax Reform Bill Full of Changes