Today, the Trump Administration released its goals for tax reform. Intended to be the most significant tax reform in American History, the Trump Administration outlined proposed changes for individuals and corporations.
For individuals, the tax plan proposes to reduce the number of tax brackets from seven to three (10%/25%/35%). The President’s plan doubles the standard deduction while eliminating most itemized deductions, essentially eliminating taxes for the first $24,000 of a couple’s earnings. Most itemized deductions would be removed, save for mortgage interest and charitable contributions. The President’s plan also provides tax relief for families with dependent care expenses. The individual reforms are aimed at eliminating certain tax breaks that mainly benefit the wealthy, but repealing both the alternative minimum tax and the estate tax. Corporate, or “business,” tax rates will be slashed to 15% with reforms aimed at leveling the playing field for American companies.
Further, the 3.8% tax on investment income imposed by the Affordable Care Act would be eliminated.
We will continue to provide updates as the President’s proposal develops into proposed legislation. These proposed reforms may have a substantial impact on employee benefit plans.
