The Tax Cuts and Jobs Act, passed in December 2017, made tax law changes that will affect virtually every business and individual in 2018 and the years ahead. Among other things, the new law may change their tax rates and have an impact on the quarterly estimated tax payments they are required to make during the year.
For many passthrough businesses, the law changes created a new 20% deduction for qualified business income. Other deductions and credits have been changed as well, including revised depreciation methods and expanded options for expensing business property.
There also are new rules for like-kind exchanges and fringe benefits. In addition, small business employers who provide paid family and medical leave to their employees during tax years 2018 and 2019 may qualify for a new business credit. Business owners can refer to the Tax Reform Provisions that Affect Businessespage for updates and resources on these topics and other business-related changes.
The IRS is highlighting these changes and more as part of its ongoing initiative to help small businesses and self-employed individuals understand and meet their tax responsibilities. Pass-through businesses, small C-Corporations, Schedule C filers (independent contractors and gig economy workers) and farmers are all affected by the new law.
The IRS has issued a number of news releases, tax tips, YouTube videos and webinars to help small businesses navigate the new tax law, and more of these products are on the way. Tax tips are written in plain language and people can subscribe to them by using the IRS’s Tax Tips email-subscription program. A variety of additional products and resources can be found on the Tax Reform Resources page.
Business owners are encouraged to check the Tax Reform homepage for the latest guidance on the tax law provisions that may affect them.