Trump Tax Plan Focused on Extending and Expanding Tax Cuts and Jobs Act

President Trump’s tax plan for this election year are brief and, in some cases, not detailed. But it is fair to say that his major tax priorities already were enacted as part of the Tax Cuts and Jobs Act (TCJA) of 2017. The few tax priorities he has discussed during the 2020 campaign focus mainly on extending or modifying provisions of the TCJA.

Following is a summary of the tax proposals Trump has discussed. It should be noted that the Trump campaign does not have a formal tax platform or proposal. The measures listed here have been discussed by the President in media interviews and in other settings.

Our summary of Democratic candidate and former Vice President Joseph R. Biden can be viewed here.

President Trump Tax Plan Priorities

• Trump has discussed modifying the TCJA’s individual tax rates with a 10% middle-class tax cut, which reportedly could include lowering the 22% marginal tax rate to 15%. For 2020, the 22% marginal tax rate applies to income over $40,125 for individuals and $80,250 for married couples filing jointly.
• Extend the individual rates enacted by the TCJA that are scheduled to expire after 2025. Many provisions of the TCJA are scheduled to expire after 2025, and conventional wisdom holds that the more popular provisions – such as lower individual tax rates – will likely be extended by Congress.
• Extend the higher standard deduction and other deductions enacted by the TCJA that are scheduled to expire after 2025.
• Extend the current $2,000 child tax credit beyond the TCJA expiration date of 2026.
• Extend the higher estate and gift tax exemptions enacted by the TCJA that are scheduled to expire after 2025.
• Require a dependent to have a Social Security number to be eligible to be claimed for the $500 other dependent credit. Additionally, the Trump proposal would require a taxpayer to have a Social Security number to claim either the child tax credit or the $500 other dependent credit.
• Trump has discussed several changes to the treatment of capital gains taxation, including 1) indexing capital gains for inflation; 2) reducing the capital gains tax rate, and 3) enacting a capital gains tax holiday that eliminates capital gains taxes for an as yet undefined period of time. Under current law, the top tax rate for capital gains and qualified dividends is 20% for income over $441,450 for individuals and $496,600 for married couples filing jointly.
• The Trump tax proposal would enact a new Education Freedom Scholarship Tax Credit, which would provide up to $5 billion worth of income tax credits annually for individual and corporate donations to state-identified not-for-profit scholarship-granting organizations.
• Though there is no specific proposal along these lines, Trump has discussed payroll tax cuts for both employers and workers, most recently as a relief measure during the COVID-19 crisis, but also before the pandemic began.

The details of the Trump tax proposal are subject to change. The success of his proposals, should he be re-elected, will depend in large part on the results of this year’s Congressional elections. We will keep you informed of any further tax proposals that may emerge in the coming weeks.

If you have questions regarding how the election could impact your tax situation, please contact us.