How Could Tax Rules Change Under President Trump?
The election of President-elect Donald Trump could mean big changes to federal tax rules for small businesses, according to Sarah Schiltz, CPA, a manager at accounting firm MarksNelson. Among the possible developments:
- Trump wants to lower the corporate income tax to 15 percent. This might even apply to S Corporations, partnerships and other pass-through entities, too. Individuals would be charged at a rate of 15 percent on passed-through income generated by the business (although a potential additional tax on cash distributed from the business could be imposed).
- Trump has recommended reducing the number of tax brackets for individuals to three: 15, 25, and 33 percent.
- The Alternative Minimum Tax for individuals and businesses could be eliminated. So could the estate tax, though it might mean the end of the step-up basis for inherited assets.
- Section 179 expensing for small businesses might see its annual cap expand from $500,000 to $1 million.
- To afford the proposed tax cuts, some existing incentives could be ended. (One that’s probably safe: the Research & Experimentation Tax Credit.) There also might be a cap on itemized deductions.
