Changes to U.S. tax law, approved Dec. 20 by the U.S. Senate and House of Representatives, are slated to go into effect in 2018.
The New York Times explains some effects of the tax reform on small businesses.
The House Ways and Means Committee breaks down changes for businesses here. Additional items described by the committee in its breakdown are continuations of existing laws.
Changes for Businesses
- The corporate tax rate decreases from 35 percent to 21 percent, starting Jan. 1.
- Businesses organized as S corporations, LLCs, partnerships and sole proprietorships will get a 20 percent tax deduction for their first $315,000 of income.
- Businesses will be able to deduct the entire cost of new equipment from taxable income.
Source: House Ways and Means Committee
Both the National Retail Federation (NRF) and the National Federation of Independent Businesses (NFIB) released statements this week in support of the new tax reforms.
“The Tax Cuts and Jobs Act slashes taxes for millions of small businesses so they can reinvest their money, grow, and create jobs,” NFIB says in a statement. “Small business accounts for half the nation’s jobs and half its GDP. This legislation recognizes the importance of small business, and we look forward to the President signing it into law.”
“Passage of tax reform is a major victory for retailers who currently pay the highest tax rate of any business sector, and for the millions of consumers they serve every single day,” NRF president and CEO Matthew Shay says.