Every year, tax laws are modified to reflect the evolving needs of our economy and society. More often than not, these changes are small and hardly noticeable to the majority of taxpaying citizens.
This year, however, the Tax Cuts and Jobs Act of 2018 brings the most dynamic changes to our tax laws in the last 30 years! Many small business owners are unclear on how these new changes will affect them and their companies. Let’s delve into these new laws and what you should know.
2018 Tax Reform and You
The provisions of the new bill impact everything from tax schedules to standard deductions. The maximum tax rate has decreased as well, with the number of tax brackets reduced from fourteen to two. Some of these changes include:
- Removal of the Investment Tax Credit
- Unemployment income can now be taxed
- Dividend exclusions are now repealed
- To help thwart tax fraud, social security numbers must be listed for each dependent on your personal return
How the Tax Cuts and Jobs Act Affects Your Business
Small business owners benefit from one of the biggest changes the new tax law brings, which grants a tax break on 20 percent of their total income. This creates more breathing room for these smaller companies to hire more employees and further invest in growth.
Perhaps the most drastic change is to the corporate tax rate. The old rate 35 percent has been slashed down to just 21 percent! This is designed to spur domestic economic growth and encourage more large businesses to set up shop in America.
Padgett Business Services is a Farmington-based tax and accounting firm that serves small businesses all over Hartford County. Call today to schedule a consultation with our expert Enrolled Agent and find out how we can help you make the most of the new tax laws.
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