On April 26, 2017, the Trump Administration released an outline of its tax reform plan. In this article, top Boca Raton tax attorneys provide a brief overview of the key pieces of the plan titled the 2017 Tax Reform for Economic Growth and American Jobs.
Outlining the Trump Tax Plan
The outline was vague and only a single page. However, the Administration provided four primary objectives for the plan. They are:
- Grow the economy and create jobs
- Simplify the Internal Revenue Code
- Provide tax relief to American taxpayers
- Lower the tax rate on businesses
The first method of individual income tax reform is through the reduction of the number of tax brackets. The number of applicable tax brackets will be reduced from 7 to 3, with remaining brackets of 10%, 25%, and 35%. However, the specific income thresholds for each bracket are still to be determined. At the current time, the most important aspect of this specific change is the reduction of the highest individual tax rate from 39.6% to 35%.
Additionally, the proposed tax reform references the following items which will have a direct impact on individual taxpayers:
- The standard deduction will be doubled from $12,700 to $25,400. This change will eliminate the need for many taxpayers to itemize deductions.
- Repeal of the 3.8% net investment income tax.
- Repeal of the alternative minimum tax.
- Additional provisions to be provided for child and dependent care expenses. Since the current Code already has many provisions for child care, it appears that the Administration will focus on addressing issues related to the cost of such care.
- Repeal of the “death” tax. However, the outline gave no indication regarding the tax on lifetime transfers.
The Administration also intends to alleviate taxes on businesses by cutting the corporate tax rate from 35% to 15%. Although unclear, the plan seems to indicate that this lower rate would also be applicable to small and medium-sized pass-through entities.
Contact Top Boca Raton Tax Attorneys Today
Please stay tuned throughout the next few months as the Administration will hold listening sessions with stakeholders to receive input and work with Congress to develop the details further. For tax and estate planning advice, contact our office today.