By Dylan Colucci
As the incoming administration works on its economic plans, several new tax changes are being proposed. These changes could affect everything from business taxes to taxes on personal income, as well as trade policies. Here’s a breakdown of the main proposals:
CORPORATE TAXES
The proposed plan suggests cutting the corporate tax rate from 21% to 20% to make U.S. businesses more competitive. Companies that make their products in the U.S. could pay an even lower tax rate of 15%.
CREDITS, DEDUCTIONS AND EXEMPTIONS
Several new tax breaks are being considered to help families and individuals including:
• Higher Child Tax Credit: Would increase the child tax credit to $5,000 to give families more financial relief.
• State and Local Taxes (SALT): Would remove the cap on deductions for state and local taxes, allowing people to deduct more.
• Social Security Benefits: Would stop taxing Social Security benefits, which would help retired individuals.
• Tip and Overtime Income: Would make tips and overtime pay exempt from taxes, helping workers in those areas.
• Auto Loan Interest: Would allow Individuals to deduct interest on car loans from their taxes.
• Family Caregivers: Would create a tax credit aimed at assisting family caregivers, recognizing the growing need for individuals to provide care for aging or ill relatives.
ESTATE WEALTH AND TAXES
The incoming administration has expressed a desire to make the estate tax cuts that were part of the 2017 Tax Cuts and Jobs Act permanent. This would preserve the increased exemption levels for estates, which could benefit high-net-worth families by reducing the tax burden on wealth transfers.
EXCISE TAXES
In an effort to target the wealth of large institutions, the incoming administration is proposing an excise tax on the endowments of large private universities. The goal is to ensure that wealthier educational institutions contribute their fair share to federal revenues.
INDIVIDIAL INCOME TAXES
Several proposals are aimed at changing taxes for individuals. One proposal would make individual income tax cuts from the 2017 Tax Cuts and Jobs Act permanent, which would include reductions in tax brackets and the doubling of the standard deduction. Another aims to replace personal income taxes with higher tariffs. This would shift the tax burden from individual earnings to imported goods, reducing the reliance on income taxes.
TARIFFS AND TRADE
There are also proposals to change U.S. trade policy, including a new tariff of 10-20% that could be placed on all imported goods, and a 60% tariff that could be put on all goods coming from China.
These tax proposals focus on lowering business taxes, offering relief to families, and changing the way the U.S. handles trade. The changes could have significant effects on businesses, workers, and the economy. However, all of the above are just proposals.
The next few months are going to be critical as we see which of them come to fruition, and it is more important than ever to start planning, so please reach out with any questions or concerns.
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