How could my tax obligations change under Trump’s presidency?
Donald Trump is officially the President-elect. While his surprise victory has garnered mixed emotions, it is now time for the American public to start planning for changes that could come under a Trump presidency. One of the areas that Trump has promised to reform is taxes. Donald Trump openly admitted on the campaign trail that current tax laws allowed him to take a $916 million net operating loss that permitted him to not pay taxes for years. Now, with a Republican President and Republican controlled House and Senate, changes to the tax code seem inevitable.
The following is a look at a few crucial provisions included in President-elect Donald Trump’s tax plan. By anticipating these changes and consulting with a California tax planning lawyer, you can be prepared and best manage your tax obligations under the new administration:
- Individual rate cuts: Trump plans to cut the tax brackets to 12, 25 and 33 percent. He would also eliminate Obamacare’s 3.8 percent net investment income tax. Accordingly, even the highest earners would pay a maximum of 33 percent. Other alterations could alter your tax planning. Trump plans to minimize itemized deductions, including eliminating personal exemptions. Further, itemized deductions would be capped at $200,000 for married couples.
- Business tax cuts: Trump is in support of significantly cutting taxes for corporations. Corporations currently pay 35 percent, and under Trump that figure could be slashed to 15 percent. However, Trump also intends to eliminate many business deductions. He supports up front deductions. He has further suggested a 15 percent tax rate for LLCs, partnerships, and S corporations.
- International tax changes: International companies that operate in the United States may see changes to their tax obligations. Currently, many foreign companies are not required to pay taxes in the United States. Under Trump’s plan, there would be a 10 percent repatriation tax on the profits of foreign subsidiaries of U.S. companies.
- Elimination of the death tax: Trump has proposed eliminating the estate or death tax entirely, which could impact estate planning for many. California residents should consult with their tax planning and estate planning attorney for help preparing for the changes in the tax code to come.