Did filing your tax return this year pique your interest in the POTUS’ new tax code plan?
A little over two weeks ago, White House National Economic Council Director, Gary Cohn, announced the POTUS’ plan for a simpler tax code. While the potential new tax code changes didn’t come with full details, the overall message was clear – the tax system needs to be simplified.
As was described in late April by the current administration, the new proposal calls for doubling the current standard deduction for American families. This means income tax for couples would not be charged until the first $24,000 of income rather than the current standard of $12,600.
Trump’s proposal also includes cutting down the tax brackets from seven to three (respectively 10%, 25%, and 35%). Currently, tax brackets range from 10% to 39.6% based on income.
While most of us have finally gotten past the anxiety caused by the always stressful tax season, you might have some new concerns and questions about Trump’s tax plan – assuming it’s approved of course.
Abigail Y. Murray, CPA, LLC in McAllen is here to offer you a bit of insight into the plan and how it may affect your financial situation.
Good News: The Plan Can Benefit Parents (And Businesses)
One of the most prominent perks of the potential plan promises to deliver more benefits to families that pay on expenses like daycare for their children.
The POTUS’ plan pitches an increase on the Child and Dependent Care Tax Credit, which is now up to a maximum of $2,100. This credit is available to parents who pay for child dependent care so they are able to go to work, or school, amongst other things.
The new plan also includes a number of provisions that would lower the tax rate for business owners – small and large alike.
Currently, countless family-owned businesses and small businesses pay tax rates as high as 39.6%. The new administration’s plan would greatly reduce the tax rate for these business owners down to an amazing 15%.
But Wait…This Plan Also Cuts Most Tax Deductions Away
Yes. Literally, most individual state and tax deductions would no longer be implemented in the new tax code plan.
And what exactly does this mean for you? While there is still uncertainty as to the exact specifications it could, unfortunately, mean no more writing off medical expenses, property taxes, and other deductions.
The reality is that there still remains quite a bit of ambiguity surrounding Trump’s tax plan that understandably raises many questions about the individual tax deductions many American families and singles are currently eligible to write off.
Treasury Secretary Steven Munich did add on that as a part of the plan, the current White House administration also intends to keep tax deductions associated to charitable contributions and homeownership.
Ideally, Trump’s proposed tax plan will reduce tax rates while encouraging economic growth. However, the concern always remains; what will these changes mean for individuals and families?
At Abigail Y. Murray, CPA, LLC, your financial well-being is always our top priority.
We want you to first take a step back and breathe for a moment.
At the accounting offices of Abigail Y. Murray CPA in McAllen, Texas we know you might feel a bit overwhelmed with these potential new tax changes, especially as you finally had a break from all this tax talk after filing your tax returns.
But we are here to help. That’s why we stay informed about the latest up-to-date legislative and administrative developments concerning taxes, so that we can provide you the best advice and accounting tips to ensure your financial success.
If you want more information about the proposed tax plan and how it may affect your situation, please contact Abigail Y. Murray, CPA, LLC today at (956) 800-5600.