Trump’s proposed tax reform plan, announced April 26, is listed below. Keep reading for how this will affect CPAs and tax professionals!
Overall Goals for Tax Reform
- Grow the economy and create millions of jobs
- Simplify our burdensome tax code
- Provide tax relief to American families—especially middle-income families
- Lower the business tax rate from one of the highest in the world to one of the lowest
- Tax relief for American families, especially middle-income families
- Reducing the 7 tax brackets to 3 tax brackets of 10%, 25% and 35%
- Doubling the standard deduction
- Providing tax relief for families with child and dependent care expenses
- Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers
- Protect the home ownership and charitable gift tax deductions
- Repeal the Alternative Minimum Tax
- Repeal the death tax
- Repeal the 3.8% Obamacare tax that hits small businesses and investment income
- 15% business tax rate
- Territorial tax system to level the playing field for American companies
- One-time tax on trillions of dollars held overseas
- Eliminate tax breaks for special interests
Throughout the month of May, the Trump Administration will hold listening sessions with stakeholders to receive their input and will continue working with the House and Senate to develop the details of a plan that provides massive tax relief, creates jobs, and makes America more competitive—and can pass both chambers.
The preceding one page announcement of core principles of the Trump tax reform plan was revealed on April 26, 2017. Many details are still being negotiated, and Surgent will bring you those details as they are made public.
A recap of the latest details on this plan follows:
- The seven current individual income tax rates would be reduced to three: 10%, 25%, and 35%. The income levels applicable to these proposed rates have not been determined.
- The standard deduction would be doubled so that fewer taxpayers would itemize.
- Although no specifics were provided, there would be some sort of deduction for child and dependent care expenses.
- The Alternative Minimum Tax would be repealed.
- The 3.8% Net Investment Income Tax would be repealed.
- The estate tax would be repealed.
- Most Schedule A deductions would be repealed except for home ownership and charitable gifts. Secretary Mnuchin specifically stated that the mortgage interest deduction would be retained.
- The business tax rate would decrease from 35% to 15% for corporations. The top rate for pass-through businesses (partnerships, most LLCs, sole proprietorships) would be reduced from 39.6% to 15%.
- There would be a one-time repatriation tax on offshore earnings. A 10% tax is being contemplated.
- There would be a change from the worldwide system of taxation where a U.S. taxpayer is taxed on income regardless of where earned to a territorial system where income is taxed in the country earned.
- No plan was included for a Border Adjustment Tax.
- No mention was made of capital gains rates.
- The plan did not include proposals for raising additional revenue lost by the tax cuts.