The GOP Tax Plan was announced today and the talking points include a reduction in tax rates for corporations and individuals.
Individual tax rates will remain the same for top earners bringing in over $1,000,000 per year, staying the same at 39.6%.
For low and middle income Americans, the tax rates will be:
The standard deduction of $6,350 will increase to $12,000 for individuals and from $12,700 to $24,000 for married couples.
The big gorilla in the room is the reduction in the home mortgage interest deduction for newly purchased homes up to $500,000 from the current level of $1,000,000.
Anybody with existing mortgages will see no change.
If you pay state and local taxes, you may continue to write off the cost of those taxes up to $10,000.
Another big win for taxpayers, especially those in Silicon Valley working at technology companies, is the repeal of the Alternative Minimum Tax.
No changes are expected to tax-efficient retirement accounts, such as IRAs and 401(k)s.
Businesses can expect the corporate tax rate to reduce from 35% to 20%, which would likely to lead to a massive inflow of capital from around the world.
This is perhaps the most significant change because the result would be a stronger dollar which in turn would cause dollar denominated debt held by other countries to be more costly to pay back.
Another win for the corporate sector is the reduction of business income to be no greater than 25%.
Plus, businesses could write off equipment costs immediately, which leads to lower tax payments in the short-term.
The Earned Income Tax Credit is set to be preserved as is the Child and Dependent Care Tax Credit.
A new Family Credit would be created which includes an increase to the Child Tax Credit from $1,000 to $1,600.
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