President-Elect Trump's Tax Proposals at a Glance

Current law

Trump¹

Marginal tax rates

The top marginal tax rate is 37% for income over $609,350 for individuals and $731,200 for married individuals filing jointly.

Rates are scheduled to increase to pre-Tax Cuts and Jobs Act (TCJA) amounts after 2025.

Make the lower TCJA top marginal tax rate permanent.

Deductions and exemptions

The basic standard deduction for married individuals filing jointly is $29,200 ($14,600 for single taxpayers or for married taxpayers filing separately). After 2025, the basic standard deduction is scheduled to revert to pre-TCJA amounts.

The TCJA suspended the personal exemption and most individual deductions through 2025.

The TCJA capped the deduction for state and local taxes (SALT) at $10,000 through 2025.

The GOP platform states: "Republicans will make permanent the provisions of the Trump Tax Cuts and Jobs Act that doubled the standard deduction, expanded the child tax credit, and spurred economic growth for all Americans."

Allow a deduction for interest on loans for cars built in the U.S.²

Allow a deduction for the cost of home generators in states hit by natural disasters.³

Let the $10,000 cap on state and local tax deductions expire.¹³

Individual alternative minimum tax (AMT)

The TCJA increased the exemption amounts and the exemption amount phase-out thresholds for the individual AMT. For 2024, the exemption amount is $85,700 ($133,300 for married individuals filing jointly) and the phase-out threshold is $609,350 ($1,218,700 for married individuals filing jointly).

Make the TCJA increased exemption amount and phase-out threshold permanent.

Capital gains and qualified dividends tax, net investment income tax, Medicare tax

The top tax rate for capital gains and qualified dividends is 20% for income over $518,900 for individuals and $583,750 for married individuals filing jointly.

In addition, there is a 3.8% net investment income tax (NIIT).

The Medicare tax on earnings is 2.9%. Self-employed individuals and individuals with modified adjusted gross incomes over $200,000 ($250,000 for married individuals filing jointly and $15,200 for estates and trusts) are subject to an additional Medicare tax of 0.9%, for a total Medicare tax of 3.8%.

Make the lower TCJA capital gains and qualified dividend tax rate permanent.

Credits

The maximum child tax credit is $2,000 and only part of it is refundable. This amount is scheduled to revert to the pre-TCJA amount of $1,000 after 2025.

The earned income tax credit (EITC) is fully refundable, and eligibility for and the amount of the credit are based on factors including the taxpayer's income, filing status, age, and the number of qualifying children. Childless workers who are at least 25 years old and less than 65 years old might be eligible for a less generous EITC than taxpayers with children.

The premium tax credit (PTC) helps to subsidize health insurance purchased from an exchange in the individual healthcare marketplace under the Affordable Care Act. Recent law changes expanded eligibility for the PTC and made the PTC more generous through 2025.

Increase the child tax credit to $5,000 per child with no income limits.⁴

Supports a tax credit for family caregivers who take care of a parent or loved one.⁵

529 accounts

Section 529 accounts can be established to pay for qualified expenses for enrollment or attendance in an eligible postsecondary institution, an apprenticeship program, or a public, private, or religious elementary or secondary school.

Expand qualifying tuition programs to cover home schooling.

Estate and gift tax exemption

For 2024, the estate and gift tax exemption is $13.61 million. This amount is scheduled to revert to the pre-TCJA amount of $5 million and will be indexed for inflation after 2025.

Transfers of appreciated property at death get a stepped-up basis.

Make permanent the TCJA increase in the estate and gift tax exemption.

Exclusions from tax

Up to 50% of Social Security benefits is taxable if combined income (half of the Social Security benefits received in the tax year plus modified adjusted gross income for the tax year) is between $25,000 and $34,000 ($32,000 and $44,000 for married individuals filing jointly) and up to 85% of Social Security benefits is taxable if combined income is over the maximum threshold.

Compensation for services, including for tips and overtime pay, is subject to income and payroll taxes.

Eliminate income tax on Social Security benefits.⁶

Exclude tips from both income tax and payroll tax.⁷

Exclude overtime pay from tax, though it is unclear whether this applies solely to income tax or to both income and payroll tax.⁸

Eliminate double-taxation for Americans overseas.⁹

Exclude income of firefighters, police officers, military personnel, and veterans from tax.¹⁰