Trump’s Tax Plans Are Going To Be “Huge”!

After the most significant election in our nation’s history, the votes are in and Republican nominee, Donald Trump has been elected to become the 45th president of the United States. President-elect Trump’s tax plan looks to reduce taxes across the board, including making the business tax rate more competitive and creating new opportunities to grow our economy. Before any proposed changes can be made, they must be approved by Congress. See below to see how Trump’s plan compares to our current system.

Business Tax

  2016 Donald Trump
Corporate Tax Rates Top rate of 35% Top rate of 15%
Alternative Minimum Tax Applies to corporations Eliminated
Pass-through Entities Income taxed as ordinary income on individual tax return Option to elect a flat tax of 15% on pass-through income
Capital Investments Capitalized and depreciated Option to expense or capitalize; If expensing, interest costs are non-deductible
Unrepatriated Earnings Not taxed until brought back into US One time tax of 10% of total unrepatriated earnings
Childcare Deductions Employer-provided day care credit capped at $150,000 Employer provided day care credit capped at $500,000; Additional deduction for employer contributions to employee childcare costs
Corporate Tax Deductions/Credits Includes Research and Development credit, Domestic Production Activities Deduction, etc Eliminate except for Research and Development
Inversion Transactions Foreign firms owned 80% or more by US shareholders are considered US firms for tax purposes No specific proposal

Income Tax

  2016 Donald Trump
Ordinary Income Rates 7 brackets with top rate of 39.6% Single                                       12% $0-37,500                        25% $37,500-112,500           33% over $112,500              Married                                   12% $0-75,000                        25% $75,000-225,000           33% over $225,000        **Head of Household status is eliminated
Standard Deduction $6,300 (single)                       $12,600 married)                     $9,300 (Head of Household) $15,000 (single)                     $30, 000 (married)             Head of Household eliminated
Personal Exemption $4,050 Eliminated and included in the standard deduction
Itemized Deduction Phase out begins:                   $259,400 (single)                     $311,300 (married) Total itemized deductions capped at:                       $100,000 (single)                 $200,000 (married)
Like-kind Exchanges Accrued under federal law No specific proposal
Net Investment Income Tax 3.8% on AGI above:             $200,000 (single)                 $250,000 (married) Eliminated
Alternative Minimum Tax AGI above:                             $200,000 (single)                     $250,000 (married)                  Trusts with income over $12,400 Eliminated
Capital Gains/Dividends Rates Maximum rate of 20% with one year holding period No change
Child/Dependent Care Expenses Child/Dependent Care Credit limited for AGI over $43,000 Above the line deductions for children under age 13 and for care for elderly dependent;             Dependent Care Savings Accounts (DCSA)- deductible $2,000 contribution every year
Carried Interest Taxed at rates on capital gains Taxed as ordinary income
Estate Tax Exclusion of $5.45 million adjusted for inflation, top rate of 40% Eliminated, Except for estates over $10 million which will be subject to capital gains tax
Gift Tax Lifetime exclusion of $5.45 million adjusted for inflation; Annual exclusion of $14,000 per donee Eliminated
Retirement Savings Contributions No limit on lifetime contributions No specific proposal
UHY LLP. Certified Public Accountants. News Alert. UHY LLP News, 9 Nov. 2016. Web. 9 Nov. 2016. 

About HR Strategies

HR Strategies is a private human resource management firm created to enable small business owners to focus on their core competencies, rather than the tedium of running payroll, providing employee benefits, or the many other facets of human resource administration. We allow business owners to concentrate on their passion, without being distracted by countless human resource responsibilities.

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