Last week, U.S. President Donald Trump released what is being called the largest tax reform plan in history: first, it will significantly cut the corporate tax rate from 35% to 15%; second, it will reduce the number of individual income tax brackets from seven to three, specifically 10%, 25%, and 35%; third, it will abolish the estate tax and the alternative minimum tax. So, what taxes are mandatory for those immigrating to the United States?
Individual Income Tax
Individual income tax is one of the most common taxes, and it must be paid by U.S. citizens, residents (green card holders), as well as international students or temporary travelers.
The U.S. individual income tax uses a progressive tax rate system, with the lowest bracket at 10% and the highest at 39.6%. Taking 2015 as an example, individuals with taxable income under $9,225 were required to pay 10% income tax; the portion between $9,226 and $37,450 was taxed at 15%; and the portion over $413,000 was taxed at 39.6%. The total tax amount is calculated by adding the tax amounts from each bracket.
Property Tax
Failure to pay or underpayment of property tax is a serious illegal act in the United States, and the government has the right to seize and auction off the property.
Many valued clients are particularly concerned about property tax issues. Unlike in China, land and property in the United States are privately owned. Homeowners hold permanent property rights and do not need to worry about forced demolition, but they are required to pay a significant amount of property tax annually.
Property tax is levied by state governments, which also determine the tax rates themselves. Half of the states have an average property tax rate of less than 1%. Property taxes in the northern states and along the West Coast are relatively lower, generally between 1% and 1.5%; in contrast, property taxes in the southern states are generally higher. Among them, Hawaii has the lowest property tax at only 0.28%, while New Jersey has the highest at 2.38%.
Note! Failure to pay or underpayment of property tax is a very serious illegal act, and the government has the right to seize and auction off the property, so please ensure you pay your taxes according to the law.
Excise Tax
Many people confuse excise tax with sales tax, but this is not the truth. Excise tax is a tax levied by the government on specific goods or services, such as air passenger taxes, distilled spirits, wine, beer, cigarettes, and telephone service fees.
The methods, content, and rates of excise taxes vary by state. Vermont has the highest per capita excise tax at $1,029, while Wyoming has the lowest at only $285.
Gift Tax
Gifts between relatives and friends may be subject to gift tax and estate tax, both of which are levied on the donor. The gift tax exemption is $14,000 per recipient per year; any amount exceeding this is counted toward the estate tax threshold and may be subject to tax. When relatives or friends make large gifts of property, it is necessary to make full use of the annual per-person exemption, file declarations in a timely manner, and keep records. Gifts between spouses or payments made directly to schools or hospitals for tuition or medical expenses are not subject to tax.