A Summary of President-Elect Donald Trump's Business Tax Plan


President-elect Donald J. Trump is expected to pursue significant changes to existing tax laws for individuals and businesses. The following is a summary of Trump’s statements on taxes and tax policy that were made during his presidential campaign as they pertain specifically to business taxation. The nature and scope of these tax proposals may change once Trump takes office in 2017. 


The First 100 Days

Trump has introduced broad legislative measures that he would like to work with Congress to implement within the first 100 days of his administration. The tax-related legislative measures include the Middle Class Tax Relief and Simplification Act; the American Energy & Infrastructure Act; Repealing and Replacing the Affordable Care Act (“Obamacare”); and the Affordable Childcare and Eldercare Act.

Business Taxation
Corporation Income Tax 
  • Reducing the corporate income tax rate from 35% to 15%.
  • Eliminating the corporate alternative minimum tax 

Business Tax Incentives
  • Increasing the annual cap on Section 179 expensing from $500,000 to $1,000,000
  • Increasing the annual cap for the business tax credit for on-site childcare
  • Manufacturing firms would be able to immediately deduct all new investments in their business

Tax Credits
 
  • Elimination of “corporate tax expenditures” except for the research and development (R&D) credit

Small Businesses/Pass-Through Entities
 
Pass-through entity owners (sole proprietorships, partnerships, and S corporations) could choose to be taxed at a flat rate of 15% on their pass-through income retained within the pass-through entity, as opposed to being taxed at regular individual income tax rates.

The plan appears to create two layers of taxation, an entity-level tax on the pass-through entity when income is retained, and a second layer of tax on pass-through entity owners when income is distributed. However, Trump has issued a press release stating that, “small business owners who elect to be taxed at the 15% business tax rate will not face double taxation.” 
Healthcare Taxes  
  • Trump has talked about repealing and replacing the Affordable Care Act entirely. Presumably, this would include repealing the “Cadillac tax” on expensive health insurance plans and the medical device tax as well. 


International Tax
 

  • Trump has proposed to repatriate offshore corporate profits at a one-time tax rate of 10%