10 Trump Tax Reform Promises

Former President Donald Trump is promising to reduce tax liabilities and simplify the tax code should he be reelected in November. Trump says the U.S. will be able to afford the tax cuts because he will restore the nation’s energy independence.

Here are the 10 major individual and corporate tax changes Republican presidential candidate Trump is vowing to make:

1. Make the ‘Trump Tax Cuts’ Permanent

The lynchpin of Trump’s tax promises is to make his 2017 Tax Cuts and Jobs Act tax reforms permanent. The bill lowered individual income tax rates across most brackets and adjusted the income ranges for each bracket, according to the Tax Foundation, as GOBankingRates reports.

For example, the law nearly doubled the standard deduction for single filers to $12,000 and for married couples filing jointly to $24,000.

While it eliminated personal exemptions, it doubled the child tax credit to $2,000 per child, with up to $1,400 being refundable.

Making an appeal to blue-collar service industry workers in June, Trump announced a new campaign vow to end federal taxes on tip-related income.

2. End Taxes on Social Security Benefits

Trump is floating the idea of doing away with the tax that seniors pay on their Social Security checks. This could be a tremendous boost for retirees. According to the Social Security Administration, up to 50% of one's Social Security benefits can be taxed if total income is between $25,000 and $34,000. When income is more than $34,000, up to 85% of Social Security benefits can be taxed.

3. Cap State & Local Taxes

The “Trump Tax Plan” put a $10,000 cap on local and state income tax deductions and limited mortgage interest deductions to the first $750,000 of mortgage debt.

4. Make the US Energy Independent

Trump has vowed to “Drill, baby drill” on his first day in office, with the aim of making the U.S. the world’s dominant producer of oil and reducing gas prices by as much as 50%.

While the Congressional Budget Office says extending Trump’s tax cuts would increase the U.S. federal deficit by $4.6 trillion over 10 years, Trump counters that his energy policies would cancel that out.

In line with this, Trump is considering ending the Biden administration’s $7,500 tax credit for electric vehicle purchases, calling it “ridiculous….Tax credits and tax incentives are not generally a very good thing,” Trump says.

5. Opt Out of Obamacare Without a Penalty

Trump has vowed to eliminate the Affordable Care Act, or “Obamacare.” Part of Trump’s tax reforms eliminated the penalty for not having health insurance, and was seen as a first step to doing away with Obamacare.

6. Permanently Reduce Corporate & Business Taxes

While Trump’s personal tax reforms are set to expire at the end of 2025, the corporate and business taxes are not. Nevertheless, Trump wants to ensure that they become permanent and further reduce the corporate tax rate from 21% to 15%.

Trump’s business taxes also introduced a 20% deduction for qualified business income for partnerships, S-corporations, and sole proprietorships, which are known as “pass-through entities.”

Instead of having to depreciate certain capital investments over time, Trump would allow them to expense them immediately.

U.S. companies with overseas profits would be charged a one-time tax to encourage them to invest in America, and they would face hurdles if trying to shift profits to avoid paying federal taxes.

7. Use 529 College Savings for Private School

The Internal Revenue Service and states have relaxed rules for 529 college savings plans since they were first introduced in 1996. If a child doesn’t use the funds for college, for instance, in many cases they can be used for adult education.

Trump would expand 529 college savings plans beyond a child’s higher education to include K-12 private school tuition.

8. No Taxes for Alimony Income

Trump’s 2017 tax reforms repealed the deduction of alimony payments for divorces finalized after 2018 and made recipient’s alimony income non-taxable.

9. Favorable Treatment for Employee Stock Options

Employees who are rewarded with stock option incentives would not be subject to the additional Alternative Minimum Tax. The AMT under Trump would also reduce taxes for high-income earners by not requiring them to calculate their taxes under both the regular tax code and the AMT system.

10. Double Exemption for Estate & Gift Taxes

Trump doubled the estate tax exemption to $11.2 million for individuals and $22.4 million for married couples.