President Trump’s Current Tax Plan
President Donald Trump's current tax plan encompasses several key proposals aimed at modifying the U.S. tax system. Below is an outline and summary of these proposals:
Summary
President Trump's tax plan aims to extend and expand upon the 2017 TCJA by reducing corporate tax rates, eliminating certain taxes, and introducing exemptions for specific income types. The plan also emphasizes the use of tariffs to protect domestic industries and proposes enhancements to tax credits and deductions to support families and businesses. Below is an outline and summary of these proposals:
1. Extension and Modification of the 2017 Tax Cuts and Jobs Act (TCJA)
Individual Tax Rates: Proposes extending the individual tax cuts introduced in the TCJA, which are set to expire after 2025. This includes maintaining reduced tax rates across various income brackets.
Corporate Tax Rate: Suggests reducing the corporate tax rate from the current 21% to between 15% and 20% to stimulate domestic business investments.
2. Adjustments to Specific Tax Provisions
State and Local Tax (SALT) Deduction: Proposes repealing or raising the $10,000 cap on the SALT deduction, which would benefit taxpayers in high-tax states.
Estate Tax: Plans to eliminate the estate tax, which currently applies to estates exceeding $13.99 million, aiming to facilitate wealth transfer without additional taxation.
3. Tax Exemptions for Specific Income Types
Tips and Overtime Pay: Proposes exempting income earned from tips and overtime from federal taxation to increase take-home pay for workers in service industries.
Social Security Benefits: Suggests eliminating taxes on Social Security benefits to provide financial relief to retirees.
4. Tariff Implementation
Universal Tariffs: Advocates for imposing a universal baseline tariff of 10% to 20% on all imports, with higher tariffs on specific countries such as China and Mexico, aiming to protect domestic industries and reduce reliance on foreign goods.
5. Child Tax Credit Expansion
Increases in Refundable Credit: Plans to increase the refundable portion of the Child Tax Credit incrementally from $1,600 to $2,000 per child by 2025, aiming to provide greater financial support to families.
6. Business Tax Provisions
Research and Development (R&D) Expensing: Proposes restoring immediate deductions for domestic R&D costs to encourage innovation.
Capital Expensing: Suggests allowing full and immediate deductions for capital expenses, such as new factories and equipment, to promote business expansion.
7. Affordable Housing Incentives
Low-Income Housing Tax Credit: Plans to authorize a 12.5% increase in the federal Low-Income Housing Tax Credit to support the development of affordable housing.
8. International Tax Agreements
Taiwan Tax Modifications: Proposes ending double taxation between the U.S. and Taiwan by amending tax codes to align with typical bilateral tax treaties.
Gene M. Bowman, Tax Attorney
Huntsville, Alabama
