Client Tip for March 2018: 2018 TAX LAW CHANGES FOR BUSINESSES
2018 TAX LAW CHANGES FOR BUSINESSES
There are some major changes in the new tax law that impact businesses. Entertainment expenses will no longer be deductible. This includes taking a client to a sporting event or live theatre; these costs will no longer be deductible. Business meals with a client are still 50% deductible. Holiday office parties remain at 100% deductible.
Tax deductibility of interest expense on business loans has changed. Small businesses with an average of less than $25 million in gross sales over the last three years will still be able to fully deduct all interest paid or incurred. Businesses over the small business sales threshold will be limited and can only deduct interest expense up to 30% of the businesses’ taxable income.
C corporations will now pay a flat 21% on their taxable income. Previously there were 4 tax brackets ranging from 15% to 35%. The corporate alternative minimum tax has also been eliminated.
Individuals who must report income from pass-through entities, such as partnerships and S corporations, may be able to deduct up to 20% of the qualified business income on their personal return. The 20% deduction may be phased out based upon items such as whether the business is a service business or not, and the amount of your taxable income.
These are some of the major changes for businesses. Please call our office if you have any questions concerning these and other changes in the new tax law.