The Tax Cuts and Jobs Act ushers in some significant tax changes for businesses which our New York CPA office has summarized below:
One of the key benefits of the TCJA for businesses is lower tax rates for C-corporations effective in the 2018 tax year. For businesses that are considered “pass-through” (such as partnerships, limited liability companies taxed as partnerships or S-corporations) may also see their tax bills cut.
- The graduated “C-corporation” tax rates will range from 15% to 35% will be reduced to a flat 21% rate under the new law.
- The corporate AMT is fully repealed beginning in 2018.
- A new like-kind exchange rule limits exchanges to real estate not held primarily for sale.
- The IRC section 179 deduction will double to $1 million, subject to phase-out thresholds.
- Bonus depreciation will double to 100% and expand to include used property. The effective date is for assets acquired and placed in service after September 27, 2017 and before January 1, 2023.
- Pass-through entities (e.g., partnerships, s corporations, and sole proprietorships) will be entitled to a 20% qualified business income deduction. The provision is applicable for business owners with income under $157,500 ($315,000 for married filing jointly). In addition, the benefit is subject to phase-out.
For additional information about how the Tax Cuts & Jobs Act may impact you, please contact our NYC CPA office.