Recent Tax Proposals in the USA: What You Need to Know

As the latest tax reforms make their way through Congress, it’s crucial for American taxpayers to stay informed. Recently, the House of Representatives has passed a key tax proposal, and it is now heading to the Senate for further review. Let’s break down the key tax proposals included in this legislation. 🏛️

Key Tax Proposals

1️⃣ Increase in Standard Deduction

The standard deduction is set to increase significantly:

• $32,000 for married couples filing jointly
• $24,000 for heads of household
• $16,000 for single filers

This increase will apply from 2025 to 2028, with the possibility of returning to original amounts in 2029.

2️⃣ Enhanced Child Tax Credit (CTC)

The Child Tax Credit per child will rise to $2,500, effective until 2028, after which it will revert to $2,000.

3️⃣ SALT Deduction Cap Increase

The State and Local Tax (SALT) deduction cap is proposed to increase from $10,000 to $40,000 for married couples earning under $500,000. This cap will also automatically increase by 1% each year.

4️⃣ Increase in Pass-through Business Deduction

The Qualified Business Income deduction (QBI) is set to rise from 20% to 23%. This change will be permanent and apply to various business structures including S corporations, LLCs, and sole proprietorships.

5️⃣ Tips & Overtime Income Exemption

For individuals with an annual income of less than $160,000, tips and overtime earnings will be exempt from federal income tax until 2028.

6️⃣ Elimination of Green Tax Credits

The proposed elimination of tax credits for renewable energy sources such as electric vehicles, solar panels, and energy-efficient equipment may significantly affect the renewable energy sector as well as tax planners.

7️⃣ Changes in Gift & Estate Tax

Starting in 2026, the estate tax exemption will be set at $15 million for individuals and $30 million for couples. Any amount exceeding this will incur a 40% tax, prompting high-net-worth families to consider advancing their estate planning.

8️⃣ New Remittance Tax

A new 3.5% tax will be levied on remittances sent from the USA to foreign countries by non-citizens, which could impact families sending money to loved ones abroad.

Final Thoughts

While these proposals could bring about significant changes to the tax landscape in the USA, it’s essential to remember that this legislation is still under consideration and details may evolve. Stay updated to ensure you’re prepared for the potential impact on your finances! 📈

Keep an eye on this situation as it develops. The decisions made in the Senate will ultimately shape the future of tax policies in the United States. 📝