The five main tax changes for the rich

The rich will probably see a large number of new tax exemptions in the “Big Beautiful Beaf” of President Donald Trump, along with permanent extensions of many of the 2017 tax cuts, according to tax experts.

Taxpayers who win $ 1 million or more are expected to see an impulse in income after taxes of approximately 3% in the Trump bill version, according to the fiscal policy center. That compares to the national average of approximately 2.5%. In terms of dollars, the winners of the millionaire will see an average income increase after taxes of $ 75,000 in 2026, according to the Fiscal Policy Center.

Virtually all central provisions of the 2017 tax reduction extend in the final bill, which was approved in the Chamber on Thursday and is now directed to Trump's desk, and some provisions become permanent. There are also several tax exemptions or tax benefits added to the invoice that most lower tax bills for those at the top, especially for investors in small businesses.

These are the five most important changes in the bill that affects the high winners and the rich.

Surprisingly, the Senate bill continues to largely the version of the Chamber of the State and Local Tax Chamber, or salt, increases the lid. The existing $ 10,000 limit in salt deductions will increase to $ 40,000 for those who earn less than $ 500,000, with the income threshold by increasing 1% per year. Initially, the Senate opposed a change that greatly benefits the best winners of the blue state. However, after the chamber threats, the Senate agreed to the level of $ 40,000.

However, unlike the original version of the Salt Chamber, the Senate bill retains a popular escape to move around the lid. Dozens of states allow an alternative solution, called the Tax on the Transfer Entity, or PTET, which encourages the owners and transfer partners to avoid the limit at the state level. It benefits all, from car and dentist concessionaires to accounting and law partners, but not employees of those companies.

The initial version of the house of the bill eliminated the benefit of lagoons for the service industries and most white collar companies, such as counters, lawyers and doctors, according to Kyle Pomerleau of the American Enterprise Institute. However, the Senate did not follow the change of the camera.

“The Senate version has no limitation in solutions,” said Pomerleau, “effectively allowing these taxpayers to use an unlimited salt deduction.”

Entrepreneurs and investors in small businesses will encourage a change in qualified shares of small businesses, or QSB. Created during the Clinton administration and expanded under President Barack Obama, the program is designed to encourage investments and the creation of small businesses. According to the current law, investors or owners of a CORP qualified for more than five years obtain reductions in capital gains taxes when they sell. A qualified company is defined as a “small business” if its total assets are $ 50 million or less. When a company is sold, the owners or investors are exempt from capital gains of up to $ 10 million, or 10 times the original investment base, which is greater.

The Senate bill increases the threshold to qualify as a “small business” from $ 50 million to $ 75 million. It also increases the exclusion of $ 10 million to $ 15 million, and creates a new stepped system to allow tax exemptions for those who wish to sell before five years.

Justin Miller, partner and national director of heritage planning in Evercore, said the new rules would allow an investor to put $ 74.9 million in a small business and have up to $ 749 million exempt from capital gains if the original base was sold for more than 10 times.

“It's encouraging investors rich in small businesses qualified with enormous potential,” said Miller.

Like the version presented by the Chamber, the Senate bill makes the heritage tax permanent, which in Washington means that it will not have an incorporated expiration date. The exemption would increase to $ 15 million per equity or $ 30 million for couples, and the exemption will be indexed for inflation.

For the ultra rich, the assets tax is the most important of all the main provisions of the Tax Code. Therefore, having some stability, at least until the next elections, will be a quieter patrimonial planning and gifts.

The Senate bill includes a limit in the value of the detailed deductions that were also included in the bill of the House of Representatives. Only about 10% of Americans, mostly the rich, still detail their taxes, since the standard deduction is now $ 15,000 for individual filing archivators and $ 30,000 for joint filing archivators. Under the versions of the camera and the Senate, taxpayers in the upper group will have to subtract 2/37 of the value of each dollar deducted on the threshold. The net effect is that the main taxpayers will only obtain a deduction benefit of 35 cents for each dollar, instead of 37 cents.

There are good and bad news for charitable donations, depending on your income level. For low and medium income income, the Senate bill includes a provision to encourage more charitable donations by 90% of Americans who no longer detail it. The 2017 tax cuts doubled the standard deduction, eliminating the incentive so that the vast majority of taxpayers detect and claim charitable deduction. The Senate bill allows taxpayers to take the standard deduction and still claim a charitable deduction of up to $ 1,000 for individual files and $ 2,000 for married sets.

However, for rich donors, who now represent most charitable donations, the Senate's bill is decidedly little charitable. The value of the charitable deduction for high -income taxpayers decreases by limiting detailed deductions and establishes a new floor of 0.5% of the gross income adjusted for the detailed charitable deduction.

Therefore, someone with $ 1 million in adjusted gross income would not obtain a tax exemption on the first $ 5,000 of donations.