Possible Tax Revisions Due to the Election of Donald Trump

Throughout the U.S. presidential campaign, tax reform was a major talking point of candidate (now president-elect) Donald J. Trump.  With his election on November 8, here is a summary of potential tax changes that may come after his inauguration:
Individuals
Tax Rates

• Ordinary income tax rates across the board will be cut to just three marginal rates: 12, 25 and 33% (chart below reflects joint filers):
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• Repealing the 3.8% Net Investment Income Tax (NIIT) on passive and investment income.
• Repealing the 0.9% Medicare tax on wages and self-employment income over a certain threshold.
• Eliminate the Alternative Minimum Tax (AMT).

Deductions

• Increase standard deduction to $15,000 and $30,000 for single and joint filers respectively.
• Limit itemized deductions to $100,000 and $200,000 for single and joint filers respectively.
• Eliminate personal exemptions

Estate & Gift

• Repeal the estate and gift tax completely.
• Stepped-up basis at death disallowed for taxable gains over $10 million.

 
Businesses
Tax Rates

• Reduce the top corporate tax rate from 35% to 15%.
• Business income from pass-through entities (partnerships, S-corporations, & sole proprietorships) will be taxed at 15%.
• Eliminate corporate AMT.
• One-time 10% tax on the repatriation of foreign earnings.
• Tax carried interest at ordinary tax rates versus capital gain rates.

Deductions

• Increase Section 179 expensing limit from $500,000 to $1 million.
• Manufacturing companies can elect to expense all new capital expenditures.
• Eliminate the deduction for various corporate tax expenditures.