Tax Reform: What Can We Expect?February 13, 2017
A lower corporate income tax and potential estate tax repeal are two changes we could potentially see under Trump’s presidency...What else can we expect from the new president and Congress?
As President Trump settles into the White House during his first month as Commander in Chief, tax and regulatory reform are certainly among his top agenda items. House Republicans have also put forward proposals that are similar in many ways, though there are important differences. It is difficult to know at this point in time when any of these proposals will be carried out, but it does appear that changes are coming, and they could be dramatic for some taxpayers.
What we know at this point
We have an extensive chart that outlines all of the impending and proposed changes in both President Trump’s package as well as the House Republican plan; download it here . Some highlights....
Lower taxes throughout - We know that the President has expressed a high interest in cutting taxes, particularly cutting the 35% top corporate income tax rate to 15%; the House plan would cap this rate at 20%. Both plans also propose reducing the number of individual tax brackets from seven to three (12%, 25% & 33%).
Estate tax repeal? - The President and House Republicans have both suggested a complete repeal of the federal estate tax, though the Trump plan would limit a step-up in basis for estates valued over $10 million. As we know, the current estate tax exclusion is $5.49 million per person (allowing a married couple to shelter $10.98 million).
Capital gains tax - The top capital gains rate would be reduced under the House Republican plan to 16.5%. The Trump proposal would maintain a top rate of 20%.
Stay tuned for updates as the debate on tax reform progresses. In the meantime, we hope our chart can help you strategize for 2017 and ensure that you are making the most out of planning decisions.
We are here to help you understand your tax planning opportunities. Contact me or any member of our Tax Services Team for further guidance.