Important Tax Changes – Businesses

Business Tax Provisions

On December 22, 2017, the President signed the “Tax Cuts and Jobs Act (TCJA)”.  The TCJA covers a wide range of individual and business tax provisions.  The remainder of this letter summarizes some of the more important provisions.

For tax years 2018-2025 the following apply.  An individual generally may deduct 20% of qualified business income from a partnership, S corporation, or sole proprietorship.  The deduction is allowed as a reduction of taxable income not in reducing adjusted gross income (AGI).  A limitation based on W-2 wages paid is phased in for joint taxpayers with taxable income of $315,000 or more ($157,500 for other individuals).  A disallowance of the deduction with respect to specified service trades or businesses is phased in above these threshold amounts of taxable income, including fields of health, law, consulting, athletics, financial services, brokerage services, or any business where the principal asset of the business is the reputation or skill of one or more of its employees or owners.  C corporations will pay a lower maximum rate of 21%, which also applies to personal service corporations as well.  The TCJA increased the maximum Section 179 deduction and phase-out threshold to $1 million and $2.5 million, respectively;  repealed the two-year carryback rule for NOLs and limited the deduction to 80% of taxable income; and repealed the manufacturing and production activity deduction.

For those who are paying college tuition, there is some good news. Several education-related benefits were extended, including the American Opportunity Tax Credit, which allows eligible taxpayers to claim a tax credit for some higher education expenses. Given skyrocketing tuition costs, families should not overlook these credits and deductions as they plan for college.

We can help you understand your tax situation and determine the best steps to address your tax challenges and any other financial concerns. We are also available after tax season to advise you on the financial strategies and planning decisions that will help you meet your goals. Please don’t hesitate to contact us today to schedule an appointment to begin discussing your options.


Going, Sebastien, Fisher & LeBouef, LLP