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The first 100 days of Trump administration seem to be a distant memory and consequently people are on edge know more about the president’s tax plan and how they will affect them. Even though there hasn’t been any legislation regarding taxes as of yet, there are some important points that can give you an idea about Trump’s tax plan.
- There might be some good news for blue-collar workers because the limit of standard deduction can be doubled to $24000. Right now, a head of the household can have the standard deduction of $9300 and married couples that are filling jointly can have the limit of $12600 while singles remain eligible for standard deduction on $6300.
- There are chances that the tax brackets would be simplified and hence fewer in numbers, for example estate taxes and supplemental taxes can be eliminated. Moreover, people might not be able to decrease their taxable income because itemized deduction will be discontinued. This action will affect people with high incomes. However not all types of deductions are going to disappear, deductions for charitable payments, retirement savings, and mortgage interest that average earners love will not be touched.
- Trump’s tax plan might see some good maneuvers for investors as well. The lower capital gain rates and the nullification of 3.8% tax on investment earnings that are imposed in the Obamacare can pave way for more investments.
- In keeping with the ‘MAGA’ slogan, the tax policies for multinational conglomerates could see some easing. For instance, they would not have to pay taxes on profits that are made in other countries. They can also be given a one-time ‘tax free’ opportunity to bring the foreign money back to the country.
- Intending to bolster the state of American business, sole proprietors, partnerships, and S-corporations could potentially see major tax relief in the coming days. The proposal which has not seen the final drafting yet would allow small business owners to pay 15% tax rates instead of paying the high income rates that are imposed on salaried individuals. Like any other tax break, it could act as a catalyst for the economic growth. The deficit for the next decade will also be lower than the one that would be generated by the tax cuts for big corporations.
- The success of Trump’s indefinite tax plan is heavily dependent on a big turnaround in economic growth. If the desired growth rates are not met with the implementation of all these tax propositions then we may only see the expansion of federal deficit. For reference, the federal budget deficit for fiscal year 2018 is $440 billion.
Many negotiations will be made and various unknowns must be realized before materializing all those tax implications therefore it’s still a long way. In uncertain economic times, it is always a wise move to speak with a knowledgeable Orange County financial advisor. Are you putting your money in the right areas? Are you getting the most out of your investments? Have you even begun to save for the future? Griffin Financial welcomes any and all questions, because we know that questions can only lead to the answers you need to secure your future.
Call Griffin Financial today: (714) 912-4764 and get the answers you need.