How Potential Tax Reform Could Impact High Net Worth Investors
The Trump administration and GOP leaders have released the framework for proposed tax reform legislation. While the outline released doesn’t include much detail, the important points for our high net worth investors include:
- Shrinkage of tax brackets to three: 12%, 25%, and 35% (language allows for a fourth bracket if needed for political cover)
- Elimination of most itemized deductions, except those for mortgage interest and charitable donations
- Standard deduction of $12,000 for singles and $24,000 for married filing jointly
- Elimination of the alternative minimum tax (AMT) and estate taxes (including the generation skipping tax)
- Maximum tax rates on corporations of 20% and pass-through entities of 25%
It’s important to emphasize that this is a starting point – tax reform is complex and has a long road ahead of it. Details will be determined through the Congressional Committee process.
Tax legislation may attract scant Democratic support, so the next more immediate step is for Republicans to pass a budget resolution so that the budget reconciliation process can be used to fast track legislation through the Senate.
We will continue to monitor events and keep you updated as further details are released.