The most sweeping tax reform we’ve seen in decades, the Tax Cuts and Jobs Bill (TCJB) impacts nearly everyone, from individuals to business owners. It is intended to provide benefits for many business owners and you will start to feel its full impact when you file your 2018 taxes.
Some of the top changes include:
- Reduced income rate on regular corporations (C Corporations) to a flat rate of 21%
- 20% of qualifying income can be deducted for many sole proprietors, farmers, and individuals who own pass-through entities such as S corporations, partnerships and LLCs.
- Higher cap of $1 million on expensing business assets through Section 179.
- Larger vehicle tax breaks
- Elimination of entertainment deductions, thus that meeting on the golf-course can no longer be written-off
- Elimination of the deduction for the cost of employee transportation fringe benefits such as bus passes, light rail passes and/or parking allowances
- Net operating loss deductions have been reduced
- Business losses on individual returns have been capped at $250,000 individually and $500,000 jointly
The new tax law has a number of changes, which may also impact your personal tax return. This is a good time of the year to reach out to your CPA and review your business and personal tax situation to see if there are any changes that would be beneficial before the end of the year.
Additional discussion around the TCJB: