Please call us at 303.295.7077 to discuss how the enumerated changes shown below affect you and your business.
The regular (otherwise known as a “C” Corporation) rate was reduced to 21% (previously it was approximately 35%). Businesses which operate as a pass-through entity (partnership, S Corporation – you know who you are as this is not exactly jargon) will be allowed a non-cash business deduction of 20% of their combined qualified business income (Good News!)
There are limits on this deduction availability especially if your individual income exceeds $315,000 (the 32% rate bracket for married joint filing couples). Don’t hesitate to call us to discuss this important change. This change could result in more married filing separate tax filings.
New equipment purchases are likely to be 100% deductible for the next few years (Note – certain sport utility vehicles used in business will still see a first-year deduction limit of $25,000). The depreciation (aka cost recovery deduction) period is now 15 years for most non-residential real property improvements.
Business interest expense is now limited to 30% of adjusted taxable income (which is taxable income without regard to depreciation, amortization, or depletion-terms we can help you understand). If business income is less than $25 million, on average, over the last prior 3 years, there is no limitation.
Businesses are now entitled to a tax credit for wages paid to an employee on FMLA, Family and Medical Leave. Employers must pay wages of 50% of the pre-FMLA wages paid to an employee to claim the credit. Also, the credit increases by .25% for each percentage point the wages paid exceed 50% of the pre FMLA wages.
Those are the highlights, we welcome your inquiries and look forward to highlighting tax planning opportunities.
H&A tax Department personnel
John