31 Oct Trump’s Tax Plan Explained
Almost a year ago, the polarized tax plan by President Trump came into law. The Tax Cuts and Jobs Act of 2017 is still a mystery to many, and many people only know what the famous critics and supporters of the law are saying, which paints a very blurry picture.
Since that’s the case and because the tax bill is hundreds of pages long, we thought that it would be good to quickly and explain it, and how it affects you.
- All businesses get sizeable tax cuts.
- Most people pay less tax.
- It’s very likely to add $2 trillion to the US debt over the next ten years.
What the Plan Means for the Rich, the Middle Classes, and the Poor
The so-called death tax that affects people when a house or some other type of estate worth over $5.5 million is inherited is now eliminated. It is a considerable benefit.
Furthermore, there are some tax deductions on the individual income tax. Most people with incomes from $9,525 and above have received a tax deduction. More specifically, each category (according to income) has lost a few percentages on their tax rates.
The Alternative Minimum Tax is now completely gone. The tax primarily existed to prevent wealthy families from getting too many tax breaks that can result in them paying very little or no taxes.
What it Means for Businesses
As we already mentioned, all businesses get significant tax cuts with Trump’s plan.
Big corporations get a huge tax cut, down to 20% from the previous 35%. Most large corporations don’t pay that tax anyway as they are usually situated in foreign tax havens. The deduction will hopefully get some of the giants to come back to the mainland.
As for small businesses, they also got a sizeable tax cut. For some, it was up to 40% and is now around 25%. It still depends mainly on the specific income of the company. Some companies with very little income can pay as low as 12%.
- Families with children under the age of 16 get a doubled Child Tax Credit. It was moved from $2,000 per child to $4,000. The phase out limits were also increased dramatically. This will greatly help the lower income families.
- A favorable tax treatment provision called the full expensing extends to the year 2022.
- The plan introduced reductions to the excise taxes on alcohol. It will last for two years only.
So there you have it, Trump’s tax plan explained in simple terms and in as short a time as possible. However, if you want to know more about it, and all the ways you can save on taxes in general, contact Golden Tax Relief, and we’ll make it our mission to give you peace of mind by helping you deal with your taxes.