Tax Changes Coming? Trump Rolls Out Proposed Overhaul

You just got done filing your taxes (hopefully), so the last thing you're probably thinking about is filing them next year. But if President Donald Trump has anything to say about it, your tax filing in 2018 may look a lot different than your 2016 filing.

The Trump administration unveiled a dramatic overhaul of the nation's tax code today, including lowering the rates for some individuals and businesses and eliminating some state and local tax breaks. What will that mean for you? And what could the changes mean long-term?

Immediate Changes

According to the New York Times, there are several major changes in the Trump tax plan:

• Reducing both individual and corporate income tax rates;
• Reducing the number of individual income tax brackets to three: 10 percent, 25 percent and 35 percent;
• Repealing the estate tax and the alternative minimum tax;
• Proposing a one-time tax for corporations on repatriated cash being held overseas;
• Doubling the standard deduction (eliminating taxes on the first $24,000 of a couple's earnings);
• Maintaining deductions for mortgage interest and charitable contributions; and
• Eliminating most itemized tax deductions.

The goal of the plan is to simplify tax filings and ease the tax burden on most Americans, including the rich. At this point, the proposed overhaul remains just that -- a proposal. The bill would still need congressional approval before going into effect.

Lasting Effects

"This bill is about creating economic growth and jobs," Steven T. Mnuchin, the Treasury secretary said at its unveiling. He added that the changes would represent "the biggest tax cut and the largest tax reform in the history of our country." But that might not be true, as the Times pointed out:

If, in fact, the proposal cuts taxes but fails to close loopholes or raise some other taxes, it would not be a true reform of the tax code. It would be a tax cut along the lines of President George W. Bush's tax measure in 2001 and 2003. Nor is it clear that it would be the largest in history. Tax cutters from Warren G. Harding and Calvin Coolidge to John F. Kennedy and Ronald Reagan vie for that title.

And the Washington Post reported that budget experts believe the Trump tax plan "would reduce federal revenue by so much that it would grow the debt by trillions of dollars in the next decade, growing interest costs and slowing the economy."

Whether or not these changes make it into the tax code before your next filing, it always helps to have an experienced tax attorney on your side.

Related Resources:

• Need help with your taxes? Get your tax issue reviewed by an attorney for free (Consumer Injury)
• White House Proposes Slashing Tax Rates for Individuals and Businesses (The New York Times)
• 5 Things a Tax Lawyer Can Do (That You Probably Can't) (FindLaw's Law and Daily Life)
• 5 Tax Filing Tips for Procrastinators (FindLaw's Law and Daily Life)