On Wednesday, the White House unveiled the administration’s proposed tax cut plan, which, if approved, would be the biggest tax cut and largest tax reform in the history of the United States. Top economic advisor, Gary Cohn, and Treasury Secretary, Steve Mnuchin, outlined the plan during a White House briefing. The following is a breakdown of their proposal.
For individuals, the plan is to:
- Reduce the number of personal income tax brackets to three, with new rates of 10 percent, 25 percent and 35 percent – all based on the individual’s income
- Double the standard deduction
- Eliminate all deductions except for mortgage interest and charitable giving
- Terminate net investment income tax that applies to individuals earning more than $200,000 per year
- Repeal the alternative minimum tax
- Eliminate the estate tax, which currently only applies to estates worth more than $5.49 million for individuals and $10.98 million for couples.
The administration also plans to offer tax relief to families with child care expenses, though details have not yet been released.
For companies, the plan is to:
- Reduce the federal income-tax tax rate from 35% to 15%
- Reduce the tax rate for pass-through businesses from 39.6% to 15%
- Impose a one-time tax on the $2.6 trillion in overseas profits earned by U.S. multinational corporations
- Move to a territorial tax system for corporate offshore income
If you have question on how the proposed tax cuts would affect you or your business, please don’t hesitate to contact one of our advisors.