Since the election, clients have asked me what Donald Trump is going to mean for their taxes. My brief answer: Nothing right now — there aren’t going to be any changes for 2016. For 2017, it looks like the Trump plan will mean that the richer you are, the more you will benefit.
As Wall Street bigwig Steven Rattner points out, more than half of Trump’s proposed tax cuts would go to the top 1% of earners (households with incomes of more than about $450,000 annually.) Amazingly, one out of every four dollars of tax reduction would go to the top one-tenth of one percent of Americans, who would see their taxes cut by an average of almost $1.5 million apiece by 2025.
Compare that with the average cut of $1,090 for people in the middle 20% of the economic spectrum (household income of around $45,000-$70,000).
Of course, all of these numbers are just proposals as part of a political campaign. But they’re part of what Trump got elected on. And any big tax cuts may be matched by spending cuts, potentially including Social Security, Medicare, education, and other programs. So, quite honestly, for my wealthiest clients, the advice is to try to defer income into 2017 if they can. For most of the rest, and especially for those toward the lower end of the earning spectrum, the advice is to hang on. It’s likely to be a wild ride.