On the campaign trail, Donald Trump promised he’d drastically slash taxes. Now that he’s firmly planted in the Oval Office, how much should you expect Trump to take off your tax bill come April?
Trump hasn’t been president long enough to get the tax code changed — especially given how busy he’s been deflecting attention from various scandals, ranging from his close advisers’ ties to Russian spies to exactly how many people are going to lose health insurance under TrumpCare™.
Lower taxes across the board
But, assuming Trump can get out from under his perpetual motion machine of bad press, your tax bill next year could be a lot smaller — especially if you’re rich.
On taxes, Trump is more in line with traditional Republicans than on many other issues, which is to say he wants to cut them (almost) across the board.
First, Trump wants to reduce the number of tax brackets from seven to three. Under Trump’s plan, you’ll pay 12%, 25% or 33%, depending on your income. Almost everyone will pay less, but those making the most will benefit the most, according to an analysis by the Tax Policy Center.
“Taxes would drop at all income levels in 2017, but most savings would go to the highest-income households. Federal revenues would fall by $3.1 trillion over the first decade,” the analysis’s authors write, and “the federal debt would rise by at least $3.0 trillion over the first decade and by least $6.6 trillion over the second ten years.”
The only way you’ll pay more under Trump’s plan is if you currently fall into the 28% tax bracket, according to Time‘s Ian Salisbury. Those earners will be bumped up to the 33% bracket, a move some Republicans take issue with. To that end, they’ve proposed an alternate tax structure where everyone pays less.
Still good to be rich
Trump also wants to cut capital gains taxes, which is good news if you have investments or plan to sell your business this year. One way the Affordable Care Act pays for itself is through a 3.8% tax on capital gains for those making more than $200,000 annually (or $250,000 for couples).
If Trump repeals the legislation, as he’s promised to do, the capital gains tax would immediately fall. House Speaker Paul Ryan wants to go even further, with only half of capital gains being treated as taxable income — a huge boon for the rich.
But, when it comes to the ACA, Republicans aren’t united on whether to offer tax credits or tax deductions. Most conservatives prefer deductions, which means the government won’t tax you on money you use to purchase health insurance.
On the campaign trail, however, Trump promised tax credits -- money the government gives you to purchase health insurance.