Among its many changes, the Donald Trump tax plan will provide large tax cuts for the middle class, simplify the tax code, and reduce the corporate tax rate.
Here's a closer look at the key elements of the Donald Trump tax plan…
How the Donald Trump Tax Plan Will Affect Personal Tax Rates
Under Trump's tax plan, low-income Americans will have an effective income tax rate of 0%. Although, Trump's tax plan hasn't yet defined the requirement for being a part of the "low-income" bracket.
The rates for married-joint filers will be cut down into three brackets from seven. Here are their rates:
- Those making less than $75,000/year: 12%
- Those making more than $75,000/year but less than $225,000: 25%
- Those making more than $225,000: 33%
The brackets for signal filers are one-half of these amounts.
These tax rates represent a substantial decrease from current levels. For instance, those currently married making less than $75,000 a year have to pay a tax rate of at least 15%, with those making less than $18,550 having to pay a rate of 10%.
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Additionally, those making more than $225,500 will have their rates cut to 33%. Right now, they pay in a range of 33% to 39.6%.
Trump's plan will also increase the standard deduction for joint filers to $30,000 from $12,600. The deduction for single filers will be raised to $15,000 from $6,300. Lastly, the Trump plan will limit itemized deductions at $200,000 for joint filers and $100,000 for single filers.
How Donald Trump Tax Plan Will Affect Corporate Taxes
The United States has the third-highest marginal corporate tax in the world among industrialized nations, according to the Tax Foundation.
Under Trump's tax plan, he would lower the U.S. corporate tax rate to 15% from 35%. The rate would be available for all businesses – no matter their size.
In addition, the Donald Trump tax plan allows for a one-time repatriation of offshore profits at a rate of 10%. According to a March report from the Citizens for Tax Justice, Fortune 500 corporations hold some $2.4 trillion of profit offshore. One of the main reasons corporations keep a stockpile of profit overseas is to avoid the U.S.' crushing corporate tax.
But those aren't the only two places the Donald Trump tax plan will have a major impact. Here's what his plan means for your investments…