Donald Trump released his tax reform plan yesterday and there are still a lot of questions. However, some things are pretty clear from this. The big winners here are owners of corporations and LLCs. Instead of profits being taxed at high individual or corporate tax rates, this proposal would cut taxes on corporations and pass through entities down to 15-20% rather than 25%-39.3%. This has been one of the most consistent features in his tax plans and it is the easiest to take advantage of. If you have a small to medium size business, now is the time to form an entity if you do not already have one.
The other big winners are extremely high earners who are in the current 39.3% tax bracket. They stand to instantly save almost 10% off their federal tax bill between the lower bracket and losing the additional Medicare tax. The elimination of the Alternative Minimum Tax likewise will save high earners a tremendous amount of money.
The increase in the standard deduction will be a big help to the vast majority of tax payers. However, Californians tend to be losers in this plan as it currently stands. State and property taxes would no longer be deductible and since California is a high tax state, we have the most to lose from this.
Call (619)462-6800 today to see how these changes could affect you.