Tax Reform: What is your Business Strategy?
A magnitude of tax tables and graphs show how our deficit is projected to increase by $1.46 trillion. The key impacts of the tax reform are in three main areas.
- Corporations: Huge corporate tax cuts from 35% down to 21%. This impact will certainly spur economic growth that President Trump has been shooting for. Expect wages and productivity to increase, thereby, putting more money in consumer’s hands. (keep an eye out and the inflation numbers this summer)
- Individuals: Granted, the marginal rates really haven’t changed and we will still have seven brackets, but the true benefit comes from an increase in standard deductions. Single filers increase from $6,350 to $12,000; married couples filing jointly increases from $12,700 to $24,000. Conversely, anyone financing a new home, can only write off up to $750,000 of mortgage interest versus the previous $1 million.
- Real Estate: Expect states such as Florida to have an influx of new buyers, especially from out of state investors. States such as New York and California, who have hefty state taxes will no longer be able to deduct an unlimited amount for state and local property taxes, plus income or sales taxes.
As you can tell, the tax reform is simply a tool to increase economic growth. An additional point to this economic growth is corporate taxes will be on par with our European competitors.
So, what is your business strategy? Now is the time to take a fresh look at your investment strategy and your plan. As forward-thinking advisors we consider these changes to not only help clients potentially maximize their opportunities, but to get a comprehensive strategy in place.
Source: Tax Cuts & Jobs Act (H.R. 1), House Ways and Means Committee
Jeffrey LaBelle is a Florida based Investment Advisor Representative whose practice offers solutions for focused risk management, institutional style portfolio management, and tax- planning services. His team offers clients a fact-based, conservative strategy approach to preserving capital and investing wisely in an ever-changing world.
For more information contact Gulf Coast Wealth Advisors.
*This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.