The Administration of the President Donald Trump has announced a tax plan that proposes to reduce the Corporate Taxes, modify the Personal tax rates, and eliminate most deductions for individuals other than mortgage interest and charitable contribution deductions.
The most significant changes proposed are the following:
- Corporate tax rate of 15%. The current federal statutory rate is 35%.
- Instead of self-owned businesses being taxed at the Personal Income Tax rate,business owners would have incomes from operations taxed at the 15% tax rate.
- No border-adjustment tax.
- An adjustment to individual tax rates. It would be three tax categories with tax rates of 35%, 25%, and 10%, down from the current tax rates.
- A one-time tax on the repatriation of foreign earnings of US companies. This would allow companies to bring back money from overseas to the US with a lower tax.
- Elimination of the Estate Tax.
- The plan calls for the repeal of all deductions for individuals aside from the mortgage interest and charitable contribution deductions.
- Repeal a 3,8% tax rate on net investment income.
- Repeal the Alternative Minimum Tax. This tax requires some people who have large numbers of deductions to calculate their income tax under the normal tax rate and the alternative and pay the higher amount.
The proposal has yet to be reviewed for its impact on the economy of the country and several specifics are still being determined.
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