On Friday, December 22, 2017, the Tax Cuts and Jobs Act was signed into law. The following tax law changes are effective for tax years beginning after December 31, 2017, unless otherwise noted.
INCOME TAX FOR BUSINESSES
There are several provisions pertaining to businesses that we believe will be of interest to you as follows.
- The corporate tax rate has been reduced to a flat 21% and the corporate alternative minimum tax has been repealed;
- The maximum amount a taxpayer can immediately expense for qualified property (Sec. 179) has been increased to $1,000,000 and the phase-out threshold amount is increased to $2.5 million;
- A 100% first-year deduction for qualified property (increased from 50% deduction) for property placed in service after September 27, 2017 and before January 1, 2023;
- The deduction for domestic production activities has been repealed ;
- The deduction of 50% of expenses relating to entertainment has been repealed;
- Net operating losses can no longer be carried back but can be carried forward indefinitely and the deduction is limited to 80% of taxable income.
While this summary is not comprehensive, we hope it will help you understand upcoming changes to your tax liability. As always, we are available to discuss your circumstances and how this new law may affect you.