With President Trump and Congress making serious moves to pass tax reform by the end of the year, FMG Suite is watching the news so that we can keep you and your clients up to date with how any new legislation would affect retirement, investing, tax and estate strategies.

We are making plans to update our content if tax reform is on the agenda with lawmakers. We also will introduce several new pieces of content, including an eBook on Tax Reform, designed to help you stay current with the tax news. Here’s a quick breakdown


One of the signature items in the reform package calls for slashing the corporate tax rate from 35% to 20%. Cutting the rate to 20% will mean more earnings for companies, depending on whether they are structured as C Corp, S Corp or LLC. More earnings may be an opportunity to revisit retirement plans and other retirement ideas.


Under President Trump’s proposal, the currently three-tier capital gains tax structure would remain in place. Under the House GOP proposal, investors would be allowed to exclude 50% of their investment income and tax the balance at ordinary income rates. The House proposal would extend to qualified dividends and interest income. It’s uncertain what measure will be in the final bill, but any adjustment in capital gains will need to be addressed.


One of the biggest shifts grabbing headlines comes in the consolidation of the seven income brackets into just four brackets. The simplification of the system leads President Trump to promise that Americans would be able to file their taxes on a single postcard (though the compromises likely to come from the process of passing the act will inevitably complicate the process).


One of the major items proposed is to change the federal estate tax exemption, which would immediately increase to $11.2 million ($22.4 million for a married couple). A change in this estate tax rules could have implications for your clients’ estate planning, but it’s possible the new exemption amount will face revisions before it lands on the president’s desk.

Other Takeaways

Another complicated yet important aspect of the tax law up for reconsideration is the Alternative Minimum Tax. The Tax Cuts and Jobs Act plans to repeal the existing AMT system. A growing number of taxpayers pay the AMT each year, so that any change may result in more disposable income.

The deduction for property taxes may be capped at $10,000, and the deduction for mortgage interest may be lowered to $500,000 from $1,000,000. These changes may prompt some property owners to consider changes, which may result in a small windfall of money.  

The tax system was complicated before, and the nuances of the changes happening right now are almost unfathomable. We want our clients to know that our content will reflect the most up to date information available as this story develops.