VanNess & VanNess, P.A.

How Trump could alter tax planning for Florida residents

Currently, American taxpayers pay personal federal income tax rates of 10 to 39.6 percent. Higher income earners may also be faced with a 3.8 percent surtax on investment income, which pushes the effective top tax rate to 43.4 percent. However, that may come down in 2017 as the result of Donald Trump's election.

If Trump follows through with his proposed tax plan, there would be three individual tax brackets of 12, 25 and 33 percent. The 3.8 percent surtax would also be eliminated. Deductions would be capped at $200,000 for married couples and personal exemptions would be eliminated. In addition to lower personal income tax rates, businesses would pay a tax rate of 15 percent, which would be a reduction from the effective rate of 35 percent, although most pay far less.

Trump has also proposed that corporate profits brought back from overseas would be taxed at 10 percent. This amount could be repaid over 10 years, and the idea is that billions of dollars or more would be returned to America. While individuals should still create an estate plan to minimize potential tax burdens, Donald Trump has proposed eliminating the estate tax. In 2016, the first $5.45 million is exempt from estate taxes, and that amount is doubled for married couples.

As the federal estate tax exemption is quite high, very few people need to take it into account when considering the federal tax implications of estate planning. However, while Florida does not, some states have their own version of an estate tax, and in most cases the exemptions are far lower. As a result, legal residents of those states may still want to meet with an attorney to discuss how the exposure can be minimized.

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