On Wednesday, September 27, the Trump Administration revealed its latest tax proposal to the public. It is a nine-page document that aims to make the tax code "simple, fair, and easy to understand." The goals of the plan are to provide tax relief to middle-class families and businesses, simplify tax return filings, and close tax breaks and loopholes.
The changes proposed to individual taxpayers include:
- Increase the standard deduction to $24,000 for married taxpayers and $12,000 for single filers.
- Consolidate the tax brackets into 12%, 25% and, 35%, with a possible additional tax applying to the highest-income taxpayers. (Note that the proposal does not include the levels at which these rates will take effect.)
- Repeal the personal exemptions for dependents and increase the Child Tax Credit. The first $1,000 of the credit will be refundable, and the credit will become available to more middle-income families.
- Repeal the Federal Alternative Minimum Tax.
- Eliminate most itemized deductions but retain tax incentives for home mortgage interest deductions and charitable contributions.
- Retain benefits that encourage work, higher education, and retirement savings.
- Repeal the estate tax and the generation-skipping transfer tax.
When it comes to businesses, the tax plan aims to provide a significant tax cut in the tax rate and create a new tax structure for small businesses.
The proposed changes are outlined below:
- Limit the maximum tax rate for income earned from sole proprietorships, partnerships, and S corporations to 25%.
- Reduce the corporate tax rate to 20%.
- Allow the Immediate cost write off for new investments in depreciable assets.
- Partially limit the deduction for net interest expense incurred by C corporations.
- Eliminate the domestic production activities deduction.
- Preserve the research and development and low-income housing credits.
The final section the tax plan touches on deals with international taxation and aims to:
- Bring back offshore profits by taxing them at a low rate when repatriating them to the United States.
- Stop companies from shifting profits into tax havens.
Here at Delap LLP, we are committed to bringing you the highest level of service and making sure that we are always aware of policy developments that affect our clients. We will keep you informed as the tax proposal changes and makes its way through Congress. If you have any questions on how the new tax proposal could affect you or your business, please contact our team today at (503) 697-4118.
Delap LLP is one of Portland’s largest local tax, assurance, wealth advisory, and information security consulting firms, located in Lake Oswego, Oregon.