How the Trump Tax Plan Will Affect You

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

This Free Software Brings Old Laptops Back to LifeMore

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

21 Restaurants Offering Free Food Right NowSaving Money

7 Dumb and Costly Moves Homebuyers MakeBorrow

House Hunters: Beware of These 6 Mortgage MistakesBorrow

Beware These 12 Common Money MistakesCredit & Debt

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Where to Sell Your Stuff for Top DollarAround The House

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

The True Cost of Bad CreditCredit & Debt

17 Ways to Have More Fun for Less MoneySave

14 Ways to Maximize Your Social Security ChecksGrow

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

10 Companies With the Best 401(k) PlansGrow

8 Ways to Take Control of Your Finances — and Be HappierGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

14 Super Smart Ways to Save on TravelSave

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

The Rich Prefer Modest Cars — Should You Join Them?Cars

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

6 Healthful Treats for Your DogFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

7 Free Sources of Manufacturer Coupons You Can Find OnlineSave

Ask Stacy: How Do I Start Over?Credit & Debt

8 Ways to Get a Good Price on a Shiny New AutoCars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Fixing Your Credit? Do These 5 Things, Avoid These 3Credit & Debt


President-elect Trump proposes leaving itemized deductions in place but capping the deductions you can claim at $100,000 for individuals and $200,000 for married couples. He wants to raise the standard deduction to $30,000, instead of the current $12,600 for couples and allow $15,000 for single payers.

Trump also would let families, including stay-at-home parents, fully deduct the cost of child care for children under 13.


What, if anything, can you do to position yourself for the possibility that these changes could take place? Tax advisers are discussing with their clients strategies that could help position them to save on tax bills in case the Trump proposal becomes law. Wind, while emphasizing the uncertainty of any changes, says, “My colleagues and I all agree it is prudent to look at the possibility that some of these proposals could pass.”

Wind outlined a few possible strategies, with the caveat that they are mostly useful for higher-earning taxpayers. Remember, though: these are only proposals. “Some of them may never become law,” Wind says. “It is very tricky to advise. I think you can (only) make people aware of the possibilities.”

  1. Defer income. If you are in one of the higher tax brackets and you could enjoy a lower tax rate if the Trump plan succeeds, try to postpone receiving some income until next year. Here’s why: For 2016, for single people with taxable income over $415,050 and married people with taxable income over $466,950, deferring income could save a lot of money because income over those amounts are taxed at the highest rate, which currently is 39.6 percent. Under the Trump proposal that highest tax rate would be 33 percent. Delaying income until after Jan.1 potentially could save a single person with $415,000 worth of income about $24,000 (and a married couple with $466,950 in income could potentially save $28,017). Tactics for deferring income could include delaying invoicing, deferring a year-end bonus to 2017 and delaying closing the sale of a business until the new year.
  2. Accelerate income. You could take the opposite approach if you think your rate might increase. For example, if you are in the 28-percent bracket and think you could be pushed into the 33-percent rate under a Trump plan, you’d try to take all the income possible in 2016, in order to pay taxes at your current rate. A married couple earning about $160,000 to $200,000 together might be among those caught in this bind, Wind says. 
  3. Take deductions. If you itemize deductions, claim all you legally can for 2016 since deductions next year could be much less generous. A tax proposal by the House Republicans would go even further than Trump’s, allowing itemized deductions only for mortgage interest and charitable donations, points out tax expert Michael Kitces.
  4. Give to charity. Trump’s proposed limit on deductions would affect about 329,000 taxpayers who take some $119 billion in itemized deductions, shrinking their possible deductions to about $45 billion, estimates the conservative American Enterprise Institute. This would “likely have a substantial negative impact on charitable giving,” AEI says. The House Republicans want to leave the charitable deduction in place, but many wealthy donors are taking no chances and making larger-than-usual donations before the end of the year.

How do you think you’ll be affected by Trump’s policies? Share with us in comments below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

Read Next: Ask Stacy: Do I Need a Financial Adviser, or Can I Manage My Money Myself?

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,018 more deals!