Hyden, Miron & Foster, PLLC Law Blog

Tuesday, October 17, 2017

The GOP Tax Plan and You

How might the proposed new tax plan impact my taxes?

President Trump and the GOP recently released a tax plan that it claims will benefit the middle class and small business owners.  While the plan is still being flushed out and more details are to come, it is important to review the basics of the plan now so that you can start to assess its personal impact on your family.  Our Arkansas tax law attorneys at Hyden, Miron & Foster, PLLC, offer an overview of the potential new tax plan and how your tax rate could be affected.  

Three Tax Brackets 

While many details must still be filled in by Congress, under President Trump’s tax plan, there will be just three tax rates:  12, 25, and 35 percent. We do not yet know which rate someone would pay if they make between $50,000 and $80,000 a year.  The plan does make it clear that the standard deduction, which is currently set at $6,350 for individuals and twice that for married couples, will nearly double.  As such, if you are a married couple that earns less than $24,000 a year, you will not pay taxes at all.  Filers should be careful, however, because the plan eliminates the personal exemption and the additional standard deduction, which are popular among tax payers.  

The plan promises to significantly increase the child tax credit, which is currently only $1,000 per child, and to allow middle class individuals to continue using the mortgage interest deduction.  The hope is that under the new tax plan, the average American will be able to file a less than one-page return that also equates to less money going to the government.  Much still remains to be discovered about the plan, however, and tax filers will want to consult with their tax attorney for assistance.

Small Business Savings 

Small business owners will likely benefit under the new tax plan. Currently, some small businesses pay as much as 40 percent in taxes.  Under this plan, most small businesses will pay at a 25 percent rate.  Small businesses with few profits could pay less than half that.  Small business owners should closely review the new tax plan when it is fully etched out to determine what changes are made to standard deductions and more.

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