The centerpiece of President Trump’s tax plan, as described on his website during his candidacy and in other communications, is a restructuring of the current tax rate system. But other significant reforms for individual taxpayers also are on the table.
Here’s a sampling of the key proposals:
Individual tax rates. Both Trump and the House GOP would replace the current seven-bracket system – featuring a low rate of 10 percent and a high rate of 39.6 percent – with a three-bracket setup of 12 percent, 25 percent, and 33 percent. Although the House GOP was silent on the thresholds in the tax blueprint it issued last year, Trump’s plan cuts off the brackets at $37,550 and $190,150 for single filers and $75,000 and $225,000 for joint filers.
To further simplify tax filing, head-of-household rates and the onerous alternative minimum tax would be completely repealed.
Itemized deductions. Trump has said he would keep most itemized deductions, but he would impose dollar limits on total deductions of $100,000 for single filers and $200,000 for joint filers.
In contrast, House Republicans have pledged to eliminate most of the deductions, other than ones for mortgage interest and charitable contributions, as well as preserving some tax breaks for retirement and college savings.
In any event, the current “Pease rule” restricting itemized deductions would be rendered obsolete.
Personal exemptions/standard deduction. The president has proposed a repeal of personal exemptions in another move aimed at tax simplification. Trump would combine personal exemptions and the standard deduction into a single deduction of $15,000 for single filers and $30,000 for married couples.