On April 26, Treasury Secretary Steve Mnuchin released the administration’s one-page “first draft” of their plan to cut taxes. What effect will this proposal have on the amount you pay?
- Cut brackets to three: 12-25-35%
- Double the standard deduction
- Unspecified new relief for families with children and dependent care costs
- Eliminate itemized deductions other than mortgage interest and charitable gifts
- Repeal Alternative Minimum Tax
- Repeal “Obamacare” 3.8% tax on net investment income
- Repeal additional 0.9% Medicare tax on earned incomes over $200,000
- Repeal Gift & Estate Tax
- Cut top rate to 15%, including on pass-through income
- Eliminate “tax breaks for special interests”
- Impose repatriation tax to bring back accumulated profits of foreign subsidiaries
- Move to “territorial system” (taxing companies on U.S. earnings only) to “level the playing field for American companies”
The Trump administration has outlined a conventionally Republican suite of changes: lower rates, unspecified new deductions for families, and incentives to repatriate foreign earnings. At the same time, they have proposed to limit certain breaks and eliminate nearly all itemized deductions, including state and local taxes.
However, these are just the latest of several proposals Trump has floated since the 2016 campaign. And many of these items are mere starting points for discussion rather than detailed policy proposals. So we shouldn’t be surprised if the White House lets Congressional Republicans take the lead on legislation.
Are you curious what might happen to your taxes under the new proposal? Call us for a free Tax Analysis. We’ll tell you where your opportunities lie, and work with you to take maximum advantage of any new rules!