It’s hard to find any articles about Trump’s tax plan that just simply explain what is being purposed without any opinion. This is my attempt to do so. There is no criticism or endorsement here. This is just a breakdown of what we have at this time.
Changes for Individuals
-Tax Brackets: There are currently seven individual tax brackets: 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. The proposed tax plan would reduce that to three brackets: 10%, 25%, and 35%.
-Standard Deduction: The 2017 standard deduction for single filers is set to be $6,350 and $12,700 for married filing jointly. Under the new plan these amounts double to $12,600 for single and $24,000 for joint.
-Itemized Deductions: Most itemized deductions will go away but two that will remain will be charitable donations and mortgage interest.
-Child and Dependent Care Credit: The current credit for child care expenses is between 20% and 35% of up to $3,000 in expenses for one child and $6,000 for two or more children. The percentage used decreases as income increases. So the max credit currently is $2,100 which would go to someone making $15,000 or less with $6,000 or more of child care expenses for 2 or more children (35% of $6,000). The proposed tax plan would expand this credit. No exact figures have been released.
-Other Changes: The alternative minimum tax, estate tax, and the net investment income surtax would all be repealed under the new plan.
-Corporate Tax Rate: Currently C corporations are taxed at 35%. S corporation income flows through to the owner’s tax return and is taxed at the owner’s individual tax rate. Under the purposed plan there would be a flat 15% tax for all businesses.
If you are interested in reading the single page tax plan that was released by the Trump administration click the link below.