This post will focus on the key pieces of the 2017 Tax Reform for Economic Growth and American Jobs; otherwise known as the Trump Administration’s tax reform plan, released on April 26, 2017.
The four primary objectives of the plan are: 1) to grow the economy and create jobs; 2) simplify the Internal Revenue Code; 3) provide tax relief to American taxpayers; and 4) lower the tax rate on businesses.
The first method of individual income tax reform is through reduction of the number of tax brackets. The number of applicable tax brackets will be reduced from 7 to 3, with remaining brackets of 10%, 25% and 35%. However, the specific income thresholds for each bracket are still to be determined. At the current time, the most important aspect of this specific change is the reduction of the highest individual tax rate from 39.6% to 35%.
Additionally, the proposed tax reform references the following items which will have a direct impact on individual taxpayers:
1) The standard deduction will be doubled from $12,700 to $25,400;
2) Repeal of the 3.8% net investment income tax;
3) Repeal of the alternative minimum tax
4) Additional provisions to be provided for child and dependent care expenses; and
5) Repeal of the “death” tax.
Please stay tuned throughout the next few months as the administration will hold listening sessions with stakeholders to receive input and work with Congress to develop the details further. However, in the interim, please do not hesitate to contact our office should you have any questions about the proposed Trump tax reform.