Trump tax plan details was officially signed on December 22, 2017 to purposely deal with Tax cuts and Job acts. This tax plan reduced the rates of corporate tax from 35 percent to 21 percent that was to remain effective at the beginning of 2018. A reduction of 37 percent was expected to commence at top individual tax rate. On the other side, the plan doubled standard deductions, removed personal exemptions and reduced income tax rates significantly.
Herein the trump tax plan details which it affects you
The trump tax plan details is advantageous to Americans at both individual and business level. Most poor Americans falling under working category could be eliminated from income tax obligation therefore simplifying their return filing process. The plan also slices corporate tax remarkably and generates a favorable top rate for small businesses that is less compared to the top rate for individuals. This plan is also a huge win for the rich since it eliminates two taxes they are required to pay while local and state taxes that are imposed on democrat-dominated and wealthy regions.
On Income taxes, the seven income tax brackets are maintained while rates are significantly reduced under the new tax plan. The American employees will encounter paycheck changes at the end of February 2018. Based on Income chart for this plan, the income is expected to increase each year in cases when inflation rise. The tax plan operates under the basis of chained consumer price index and as a result, this will transfer people to higher tax brackets after several years. The plan doubles the standard deduction whereby an individual filing deduction doubles from $6,350 to $12,000. Joint and Married filers deduction raises from $12,700 to $24,000. The plan removes personal exemptions such as the initial $4,150 charged for each each individual claimed during taxation. Such exemption is favorable for American families with many members. The most itemized deductions are also eliminated under this tax plan such as unreimbursed business expenses.
The plan requires individuals and businesses to maintain deductions arising from charitable donations, interest from student loan and retirement savings. The subtraction on mortgage interest is limited up to $750,000 of the loan and this implies that home equity credit lines will no longer be impacted. The deduction for medical expenses is expanded under the trump tax plan details such that the taxpayers are are allowed to subtract their medical expenses that are equal or greater than 7.5 percent of their income.
The business taxes are also significantly favored since the tax plan reduces them to 21% compared to the earlier 35%. The act increases the standard deduction to 20% effective between 2018 and 2025 for all pass-through business such as Partnerships and sole proprietorships. The plan also restrict corporations to deducting their interest expenses up to 30 percent of their income. This brings negative effect especially to financial Companies because it makes borrowing more expensive. It allows Companies to subtract the value of depreciable assets annually instead of amortizing them after several years.
Eventually, trump tax plan details has great impact to individuals and families especially those receiving higher income since it reduces their income tax rates considerably. The plan makes American progressive tax to become more regressive and as a result decreasing tax rates for all citizens especially families with high income earners.