The world had been abuzz with the latest developments of the presidential elections in the U.S. With many people rooting for Hillary Clinton, it came as a shock and surprise to everyone when Donald Trump won. A lot of speculations were made as to who would do what if they became the new president. For Donald Trump, the first agenda on his list was taking care of the increased taxes in America. Let’s have a look at the different areas where he has promised to reduce taxes.
For individual taxpayers, the news is as good as it gets. The Income taxes are expected to become lower, as was promised by Trump previously. Previously there were seven tax brackets and now it will be reduced to three. The taxes ranged from 10% to 39.6% depending on the annual income. Now taxes are divided as 15% for people earning more than $75,000, 28% for earnings below $225,000 and 39.6% for $225,000.
The new tax laws promise to eliminate head of household filing status which was meant for single individuals with dependents. For joint filers, the new plan is going to increase the standard deduction from $12,700 to $30,000. For unmarried individuals, the amount will raise from $6,350 to $15,000.
The estate tax will be removed and till Trump’s presidency, estate owners won’t have to worry about paying extra for their land. But for people with estates worth more than $10 million, certain taxes would be applicable. If the owner decides to sell the estate, only then will these taxes be applied. In case of death of the beneficiary, taxes won’t apply immediately.
Currently the tax rates for corporations are 35%. Trump’s new tax proposals will cut this tax down to 15% because as per him 35% tax is the highest for any corporations in today’s world. But this won’t have any effect on asset acquisitions and businesses will be allowed to recoup the acquisition costs. Currently, in view of the tax laws, businesses are depreciating the price of purchased assets with every passing year. The new tax plan that has been proposed increases tax benefits for corporations.
The 15% tax is going to be applied to business incomes from every type of organization. This includes S corporations and partnerships as well. It will impact the revenues of federal taxes and decrease them dramatically.