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Trump Administration Releases Broad Tax Plan

April 26, 2017

The White House today released a broad one-page outline of its plan to overhaul the tax code, addressing a few key areas while generally remaining light on details.

The plan, which is very similar to the House of Representatives tax blueprint from June 2016, would:

  • Reduce the number of individual income tax brackets to three — 10 percent, 25 percent and 35 percent.
  • Double the standard deduction to $12,000 for individuals and $24,000 for joint filers.
  • Eliminate most itemized tax deductions, but retain deductions for mortgage interest and charitable contributions.
  • Repeal the estate tax and the alternative minimum tax.
  • Replace the corporate income tax [35%] with a 15% tax on all business entities (including Subchapter S Corporations, Partnerships, LLCs, etc.

While the retention of the charitable deduction is a positive for charities, especially when some previous discussions had focused on changes in the deduction, the plan does raise many concerns related to giving and fundraising.

First, an increase in the standard deduction could lead to fewer taxpayers itemizing and subsequently, a reduction in giving. Second, deductions in marginal tax rates, which would affect most taxpayers, could have an impact on giving, as could the elimination of the estate tax.

Finally, because of the lack of details in the plan, it’s unclear if there would be any limits on the charitable deduction for higher-income taxpayers.

However, at this point, because there aren’t many details, and the plan may change significantly as Congress debates tax reform, the overall impact on giving isn’t clear.

AFP will continue to keep members apprised of the tax reform situation in Congress and will encourage members to call and email their members of Congress at the appropriate time if circumstances warrant.