Trump's tax reform plan: 7 things to know

President Donald Trump unveiled his administration's tax reform proposal in late September, and as Congress transitions its attention from healthcare legislation to tax reform, Becker's Hospital Review takes a look at the details of President Trump's plan.

1. Under the new framework, the number of tax brackets would be lowered from seven to three:

12 percent: up to $37,500 annual income for individuals, $75,000 for families

25 percent: $37,501-$112,500 for individuals, $75,001-$225,000 for families

35 percent: $112,500+ for individuals, $225,000+ for families

2. The corporate tax rate would be lowered from 35 percent to 20 percent.

3. Small and family-owned businesses would be taxed at a maximum of 25 percent, down from the previous cap of 34 percent.

4. To fund reduced tax rates, Republican leadership needs to find alternate sources of revenue. Plans such as repealing deductions for state and local taxes, repealing deductions for interest paid on business debt and limiting a repeal on interest deductions for corporations have received mixed support from Republican senators, according to The Washington Post.

5. The plan would permanently repeal the 40 percent estate tax, which is currently imposed if the gross assets of the deceased exceed $5.45 million, according to The Washington Post.

6. The plan doubles the standard deduction for all groups but would eliminate itemized deductions except for those on charitable contributions and mortgage interest, according to The Balance.

7. Personal exemptions would be eliminated under the plan, meaning taxpayers would no longer reduce income for each person claimed on their tax return.

 

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