Things slow down in our industry (not at Beta, though!), it’s an appropriate time to review some of the provisions of the Tax Cuts and Jobs Act (TCJA) that may significantly impact their taxes for 2018 and beyond. Generally, the changes apply to tax years beginning after December 31, 2017, and are permanent, unless otherwise noted.
Corporate taxation. Replacement of graduated corporate rates ranging from 15% to 35% with a flat corporate rate of 21%. Replacement of the flat personal service corporation (PSC) rate of 35% with a flat rate of 21%. Repeal of the 20% corporate alternative minimum tax (AMT).
Pass-through taxation. Drops of individual income tax rates ranging from 0 to 4 percentage points (depending on the bracket) to 10%, 12%, 22%, 24%, 32%, 35% and 37% — through 2025. New 20% qualified business income deduction for owners — through 2025, called the QBID (Qualified Business Income Deduction).
Reduced or eliminated tax breaks. New disallowance of deductions for net interest expense more than 30% of the business’s adjusted taxable income (exceptions apply). New limits on net operating loss (NOL) deductions.
Elimination of the Section 199 deduction, which is also commonly referred to as the domestic production activities deduction or manufacturers’ deduction (DPAD) — effective for tax years beginning after December 31, 2017, for noncorporate taxpayers and for tax years beginning after December 31, 2018, for C corporation taxpayers
Some additional changes include:
Don’t wait to start 2018 tax planning! This is a small list of many significant TCJA changes, which will affect small businesses and their owners beginning this year. Call a professional, to better understand how these and other rules will affect you.
The combined impact of these changes should inform which tax strategies you and your business implement in 2018, such as how to time income and expenses to your tax advantage. The sooner you begin the tax planning process, the more tax-saving opportunities will be open to you; therefore, don’t wait to start; contact us today at firstname.lastname@example.org.