Trump's Potential Tax Law Changes
With the beginning of a new presidency, there has been much talk about potential regulation and/or tax law changes. While nothing official has been released, we feel it important to keep our clients informed on potential tax law changes.
Currently, we are in the midst of high individual and corporate tax rates, with individuals potentially paying a top marginal rate of 39.6%. This doesn’t include one’s state tax rate, so the total marginal rate is even higher. Corporations also pay a higher than average top marginal tax rate of 35% (comparing to other countries).
President Trump and the GOP have repeatedly expressed the intention to lower both individual and corporate taxes. The chart below highlights the GOP’s tax proposals.
One thing to note is that President Trump has indicated that he wants to significantly increase the standard deduction. This has potential large impacts for retirees. For example, for a single filer, he has proposed increasing the standard deduction from $6,300 to $15,000, more than double! For those who do not itemize each year, often because they now own their home and do not have higher mortgage interest deductions, this will be a great benefit.
Finally, a largely discussed policy change has been the proposal to get rid of the estate tax. Currently, top rates for estate taxes are 40%.
Keep updated on our blog as we will be posting updates as we receive more information in this area.