Trump Tax Reform
By Odette Mikhail, CPA
Now that April is behind us and your corporate returns have either been filed or extended, it’s a great time to look at the new tax plan released last Wednesday by the Trump administration. The plan would have broad impacts on the auto industry, from global auto manufacturers to mom-and-pop car dealerships.
With the new Trump tax reform, most businesses with high tax rates seem to be finally getting a break. The plan would cut the 35% corporate income tax to 15% for all businesses. While this sounds like it’s a dream come true, this tax cut comes with many reductions or eliminations to corporate deductions that a business may currently take advantage of.
The plan imposes a one-time 10% tax rate on corporate cash held overseas as a way to make America’s corporate tax globally competitive, avoid tax maneuvers and encourage investors to put their money to work in America while benefiting from the newly-lowered corporate tax rate.
The plan has many pros and cons and seems to benefit certain tiers of taxpayers more than others. It all should be clear once the law is drafted but in the meantime we recommend you to talk to your CPA to discuss in detail on how you can benefit from the plan.
It’s very important to evaluate your tax position and fully understand which deductions you can benefit from. Tax planning is very helpful in situations like this as the goal is to minimize your tax liability while sustaining your net worth. Early tax planning will give you more flexibility to make necessary changes and to avoid year end surprises.