tax rates

Business Tax Breaks for 2018

Although individual tax brackets have been lowered, many businesses will also reap the benefits of major changes. Here are some of the major changes:

Corporations: The corporate tax rate for c corporations has been reduced to 21 percent from 35 percent. Hopefully this will encourage more investment and business activity in the United States due to these new lower rates.

S-corporations, partnerships, and sole proprietorships: Business owners will receive a 20 percent deduction from their business income starting in 2018. To give an example, if a small business earned $150,000, then they would get a $30,000 deduction. However, there are limitations based upon income thresholds and even the type of business that you operate, including professionals such as accountants, lawyers, doctors, and any trade or business where the principal asset is the reputation or skill of the owner.

There are other factors to consider when calculating this deduction such as wages and assets, and the calculations can be very detailed.