Michael Zhuang summarized the "Trump Tax Plan" in his monthly newsletter. Here is his summary:
I'm not going to lie. I'm pretty excited about that. I mean, it would probably be terrible for our deficit, but for me personally.....dropping 7% off my marginal tax rate, I don't get personal exemptions anyway, I don't care what the standard deduction is, I'm still well below $200K for itemized deductions, I plan to pay off my mortgage this year etc. The only really bad thing there for me is the increase in Social Security tax base. And depending on how high that is set, it could overcome everything else I got. But presumably it would also come with a higher Social Security benefit, which would help.
And of course I love the idea of simplifying things. Look at all the people who could quit itemizing!
Eliminating the step-up in basis would be problematic. I mean, who has records of a stock or property bought by grandpa 60 years ago?
What do you think of the plan? Would it help or hurt you?
On personal income tax:
The number of tax brackets will be reduced from seven to three, and the top marginal income tax rate will be reduced from 39.6% to 33%.
Personal exemptions will be eliminated.
Standard deduction for married filing jointly will rise from $12,600 to $30,000.
Itemized deductions will be capped at $200,000 per household.
Mortgage interest deduction will be eliminated.
On corporate income tax:
Tax rate will be reduced from 35% to 25%.
On payroll tax:
Social security wage base will increase significantly from the current $118,500, though the final number is not yet known.
On estate tax:
Estate tax will be eliminated, but not gift tax.
Inherited property basis step-up will be eliminated as well. That means that when you sell a property you inherited from your grandpa, the tax basis (to calculate capital gain tax) of the property will not be the time you inherited it but the time your grandpa bought it. The CPA commented: "This has the potential of creating an impossible record discovery burden."
I'm not going to lie. I'm pretty excited about that. I mean, it would probably be terrible for our deficit, but for me personally.....dropping 7% off my marginal tax rate, I don't get personal exemptions anyway, I don't care what the standard deduction is, I'm still well below $200K for itemized deductions, I plan to pay off my mortgage this year etc. The only really bad thing there for me is the increase in Social Security tax base. And depending on how high that is set, it could overcome everything else I got. But presumably it would also come with a higher Social Security benefit, which would help.
And of course I love the idea of simplifying things. Look at all the people who could quit itemizing!
Eliminating the step-up in basis would be problematic. I mean, who has records of a stock or property bought by grandpa 60 years ago?
What do you think of the plan? Would it help or hurt you?
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