The sudden and surprising victory of Donald Trump brought about a jolt in the market initially and then gradually invigorated them. In few circles, it triggered different kinds of protests and in other circles; it is fueling a CalExit movement for California so that it moves off from their union. However, this could also invite a level of tax planning. Presidential Candidate Donald Trump didn’t hide his views on the fact that the present tax system requires much of a reform. After hearing a few things which he said, he even sounded somewhat like Warren Buffet. He said that the tax laws are to be blamed due to the manipulation of the same.
As Republicans retained control over the Senate and the House, there are some tax cuts which are inevitable. Due to this unusual amalgamation of events, Trump and Congress may tell the tax code that it’s fired. This would clearly imply that deferring income to the coming year if possible would rather be a wise decision. The following year, the rates are going to be low enough. As per the present law, we are liable to pay taxes on ordinary tax at graduated rates which stretch from 10% to 40%.
However, since the Obamacare has been into effect, the taxpayers with high income pay a surplus of 3.8% surtax on their net income of investment. This means that the federal rate for people is actually around 44%. Long term capital gains and qualified dividends are taxed at either 15% or 20% as per your income. This rate even clashes with the added 3.8% for new investment income tax for Obamacare.
Key considerations of Trump’s tax plan
- Curb of individual rates: Trump proposes about cutting down the tax categories to 3: 12, 25 and 33%. He is all poised to let go of Obamacare’s net investment income tax of 3.8%. There are few pitfalls too which would alter your usual tax planning
- Tax cuts on businesses: Business organizations will probably qualify for huge tax cuts. The corporations currently owe 35% and Trump would curb that to 15% and at the same time he would waive off majority of the business deductions. Rather than depreciation throughout many users, he would also allow straightforward deductions.
- Profits from abroad: One more change brought forward to impact the international companies which are all based in America would be towards the billions in the form of overseas profits. The plan made by Trump would impose to 10% tax on accumulated profits of foreign parts of US companies. There is a 10% charge which has to be paid over a span of 10 years.
Apart from the above changes, the Death tax is yet another thing that Trump hates and hence he will eliminate. If you’re doubtful about all such changes, get in touch with an income tax specialist or a personal tax specialist. The tax services specialist will give you the required knowledge on taxes and the possible changes after change of the US President.