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The Tax Cuts and Jobs Act (TCJA) was signed by President Trump last week, and poses significant changes for both individuals and businesses. Here are some of the ways that the new tax reform law impacts businesses. These changes are effective for tax years after December 31, 2017, unless otherwise noted.
- Graduated corporate tax rates ranging from 15% to 35% are replaced with a 21% flat corporate rate
- The 20% corporate AMT has been repealed
- Owners of partnerships, LLCs, S corporations, and sole proprietorships are eligible for a new 20% qualified business income deduction — through 2025
- For assets acquired and placed after September 27, 2017, and before January 1, 2023, the bonus depreciation is doubled to 100% and qualified assets have been expanded to include used assets
- The expensing phaseout threshold increases to $2.5 million, and the Section 179 expensing limit has doubled to $1 million
- Deductions for net interest expense in excess of 30% of the business’s adjusted taxable income are no longer allowed (with exceptions)
- Net operating loss (NOL) deductions have new lmits
- Effective for tax years beginning after December 31, 2017, for noncorporate taxpayers and for tax years beginning after December 31, 2018, and for C corporation taxpayers, the domestic production activities deduction (Section 199 deduction) has been eliminated
- Like-kind exchanges are now limited to real property that is not held primarily for sale
- Employer-paid family and medical leave now provides employers with a new tax credit — through 2019
- Excessive employee compensation has new limits
- Deductions for entertainment and, in some cases, meals and transportation, and other employee fringe benefits, now have new limits
Read more about how this law may impact you both personally and professionally.
