Tax reform is a hot topic in the business world, as the latest changes could have a significant impact on your business. With the Tax Cuts and Jobs Act of 2017, the federal government has made sweeping changes to the tax code, and it’s important to understand how these changes could affect your business.
The most significant change is the reduction of the corporate tax rate from 35% to 21%. This could have a major impact on businesses, as it could result in a significant reduction in taxes paid. Additionally, the new law allows businesses to immediately write off the full cost of certain investments, such as equipment and machinery, which could lead to significant savings.
The new law also includes changes to the individual tax rates. The top rate has been reduced from 39.6% to 37%, and the standard deduction has been nearly doubled. This could result in a significant tax savings for individuals, which could lead to more disposable income and increased consumer spending.
The new law also includes changes to the taxation of pass-through entities, such as partnerships and S corporations. These entities are now eligible for a 20% deduction on their qualified business income, which could result in a significant tax savings.
Finally, the new law includes changes to the taxation of international income. The new law includes a territorial tax system, which means that income earned abroad is only taxed in the country where it is earned. This could result in a significant tax savings for businesses with international operations.
Overall, the new tax law could have a significant impact on businesses. It’s important to understand how the changes could affect your business so that you can take advantage of the new opportunities and minimize your tax liability. Consulting with a tax professional can help you understand the new law and how it could affect your business.