As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. One factor that compounds the already complicated planning challenges is the outcome of the Presidential election. We could likely see some significant tax reform. Just what and when; it is too early to tell but here are a few highlights of President-elect Trump’s campaign tax proposals.
- Individual rate cuts to three tax brackets: 12%, 25% and 33%
- Elimination of the 3.8% net investment tax created by Obamacare
- Business income earned from an S-corp, partnership or sole proprietor taxed at 15%
- Corporate tax rate reduced from 35% to 15%
- Dramatic limit on itemized deductions
- Expensing of all asset acquisitions
- Elimination of the estate tax
Additionally, Congress has yet to act on a number of important tax breaks that will expire at the end of 2016. Some of these expiring tax breaks will likely be extended, but perhaps not all, and as in the past, Congress may not decide the fate of these tax breaks until the very end of 2016 (or later). For individuals, these breaks include: the exclusion for discharge of indebtedness on a principal residence, the treatment of mortgage insurance premiums as deductible qualified residence interest, the 7.5% adjusted gross income floor beneath medical expense deductions for taxpayers age 65 or older, and the deduction for qualified tuition and related expenses.
The following highlights several potential tax-saving opportunities for you to consider.
To learn more, or to discuss specific strategies, please contact us. We would be happy to meet with you.