Tax Break…Anyone?

One of the more anticipated pieces of legislation out of Washington DC has been the Trump tax proposal — or really ANY tax proposal — that has been said to carry some kind of relief for all taxpayers.

tax-formsHealthcare is another hot button but taxes slightly edge out healthcare as the #1 item of interest (and if my readership is any indication, the subject of taxes is my #1 most read topic year-over-year).

This is at least a two-part edition, so here goes the tip of the iceberg of ideas being floated by reporters on the front lines in Washington:*

  • Lowering the corporate tax rate to 15%
    • theoretically encourages US corporations to bring back, or “repatriate”, cash being held overseas.
  • Simplification of individual tax brackets to three: 10%, 25% and top rate of 35%.

  • Estate tax repeal
    • but with the possibility of a “Canadian-style” capital gains tax at death as a replacement.
  • Changing the tax deductibility of employee 401k contributions
    • possibly limiting the amount of the current $18,000 that can be contributed pre-tax (has similarities to the current Roth 401k rules)
  • Changing the maximum tax deductibility of IRA contributions
  • Doing away with the federal deduction for State and Local taxes
    • VERY interesting and counter-intuitive debate!  Would affect high tax states like NJ, NY, California most…with Democrats against and Republicans favoring.
  • Doing away with the AMT (Alternative Minimum Tax)
    • has been said to create minimal savings overall for taxpayers
  • Higher standard deduction
  • Leaving untouched the mortgage interest deduction and deductions for charitable contributions.

There are additional ideas on the table. These are all SUPER-preliminary and when finalized (if ever) by Congress must be evaluated by your CPA or tax professional in relation to your personal tax filing.  In the meantime, I will be asking my tax adviser the same…followed by well-considered investment decisions.

*Sources:  here;  The Wall Street Journal   here


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