Hyden, Miron & Foster, PLLC Law Blog

Tuesday, December 13, 2016

Six Tax Planning Strategies To Prepare For A Trump Presidency

Tax reform is high on the list for President Elect Donald Trump, who has vowed significant tax reforms in the first 100 days of his presidency. With a Republican controlled House and Senate, it is likely that his reforms will happen. If you haven’t had a chance to review the proposed reforms, here is a brief primer.

  1. Reduced taxes and tax brackets from seven to three – Trump proposes a 3-tiered tax structure that would tax ordinary income at 12%, 25% and 33%, depending on household income. Within those three brackets, he proposes a 0% capital gains rate for first-tier taxpayers, 15% for second-tier and 20% capital gains rates on third-tier tax payers.
  2. No More Estate Tax – under current law, an estate valued in excess of $5.45 million is taxed at 40% of the excess value. Mr. Trump plans to eliminate this tax entirely.
  3. Business Tax Cuts – the current corporate tax rate is 35%. Mr. Trump proposes to reduce that to 15% and to eliminate most business deductions.

How might the Trump Presidency affect your tax planning?

With tax laws being overhauled, what does that mean for your tax planning now and in the coming year? Here are a few strategies to consider:

  1. Defer your income until 2017 – depending on your tax bracket, you can save anywhere from 2% to 10% by deferring, with the highest savings for lower-income wage earners. Caveat – if you earn between $127,500 and $200,500, your rate will increase from 28% to 33% under Trump’s proposed plan, so deferment is not for you.
  2. Sell Investments Before 2017 – this is only for those who earn between $127,500 and $425,400 (if single) or between $255,000 and $487,650 (if married filing jointly) – your capital gains tax rate will increase in 2017.
  3. Give to Charity Before December 31, 2017 – For those high-earning taxpayers who make more than $250,000 (single) or $300,000 (married filing jointly), giving to charity earlier rather than later can save you from the reduction in itemized deductions.
  4. Business Owners – Don’t by new assets until 2017 if you want a bigger bang for your buck on business purchases.

With all of the proposed changes going on in the financial world, it makes sense to talk with an experienced tax-planning attorney.

Tax Changes Have You Confused?

The experienced tax attorneys at Hyden, Miron & Foster can reduce the confusion surrounding the proposed tax reforms and provide you with a solid road map to protecting your assets and getting the most financial rewards for your work. Contact us today or call 888.770.1848 for a consultation.

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