The Trump Administration is proposing a huge overhaul of the way Americans pay taxes. If successful, items on the new tax bill would have far-reaching repercussions for taxpayers and the government alike, cutting down an estimated $9.5 trillion over its first decade in taxes paid and in Federal revenue.
Some highlights from the proposed tax plan, according to the Tax Policy Center:
- Tax brackets would be cut down from the current seven brackets, starting at 10% and ending at 39.6%, to just three, at 12%, 25%, and 33%
- The standard deduction would be increased from the current $12,700 to $30,000
- Personal & dependent exemptions would be repealed
- Mortgage interest, charitable, and itemized deductions would be capped at $200,000
- The top corporate tax rate would be reduced from 35% to 15%
The Tax Policy Center has also released the below chart for a side-by-side comparison of the current tax laws, Trump’s proposed tax plan, and the House Republicans’ proposals, with the last being more moderate in the changes proposed than Trump’s plan.
Will the tax bill come through Congress in 2017? It’s unclear yet when these changes will take effect. Wondering what you can do in anticipation for these possible changes? Ask the Taxman what preparing for the next few years looks like for you.