Carolyn Kaster / AP
The proposed changes in President Trump's tax plan, and resulting impacts on individuals and corporations:
Change: No deducting state and local taxes from federal returns.
Impact: The average individual in high-tax states like Connecticut, California and New York would pay an additional $19,000 in taxes according to the Tax Policy Center. One-third of Americans usually benefit from these deductions, and the change could see home values drop according to the National Association of Realtors.
Change: Nixing deductions except for mortgage interest and charitable contributions.
Impact: Deductions could be cut for healthcare premium payments, student loans, contributions to individual retirement accounts, alimony payments, student loans, and disability insurance. (Tax relief for childcare costs is mentioned but not detailed). Contractors and those self-employed could lose the deductions that lower their taxable income and help them run their businesses.
Change: Doubling the standard deduction
Impact: This would lower taxable income, though the impact depends on each individual's specific situation and what bracket they fall into.
Change: Cutting the top tax rates
Impact: The wealthiest individuals would see their tax rate drop from 39.6% to 35%. Pass-through corporations, people in real estate, or money managers could see their rates reduced from up to 39.6% to 15%.
Change: Eliminating the estate tax and alternative minimum tax (AMT)
Impact: Eliminating the so-called "death tax" will remove taxes that are levied upon transferring estates worth over $5.49 million. Eliminating the AMT will allow individuals to take standard deductions they are normally not eligible to take, though it's unclear if doubling the standard deduction would still translate to cuts for those individuals.
Other changes
- Businesses would owe little or no tax on future foreign profits.
- Shareholders of Master-Limited Partnerships, often associated with oil-and-gas companies, will also get a reduction in their taxes, per the WSJ.
- Tech companies are pleased with Trump's proposal to shift the U.S. to be a "territorial tax system," which only taxes domestic earnings. That will decrease the amount of taxes many tech companies owe each year.