The Trump Administration articulated on their up-coming tax reform proposal, with a “framework” document that expanded slightly versus the original presented in April. Here are the highlights from the summary proposal.
Standard Deduction Increase (Business Insider)
“Here’s how that math works. Let’s say you are single with no dependents, and you have a moderate income. Currently, you get to take the standard deduction ($6,350) and one personal exemption ($4,050). If you are 65 or older, you also get to take an additional standard deduction ($1,250). That adds up to $10,400, or $11,650 if you’re over 65.”
“The Republican plan would replace all these provisions with a single deduction of $12,000 ($24,000 for married couples.) That’s a 15% increase — except for seniors, who get a 3% increase.” – Business Insider reported.
Three Tax Brackets
The tax plan will concentrate the tax brackets from 7 to 3 (12%, 25%, 35%). So, far no specificity in income brackets, per stated percentages.
No more AMT (The Washington Post)
The AMT (Alternative Minimum Tax) will disappear. This is applied currently to people with individual incomes of $130,000 and married couples with $160,000. Purpose was to close the loophole for wealthier families from taking tax breaks. It’s been a big part of the tax code as the families have gotten wealthier throughout the decades.
Business Owners Will Pay Less (The Hill)
35% to 20% is the framework, and that means significant reduction in tax for corporations.
There are some heightened concerns that might effect state constituency, as The New York Post reported on what Governor Cuomo stated regarding the tax framework. One specific complaint is of the elimination of “state and local tax deductions on federal returns — a write-off used by more than 3 million residents in New York”.
““It is the height hypocrisy,” he said. “You have an administration saying I want to cut taxes and now literally they want to tax you on the taxes that you pay”, NY Governor Cuomo stated.
Below Images of the Trump Tax Reform Framework, provided by Axios.