2018 Tax Changes for Businesses include:
- Easing of depreciation rules:
- Section 179 expense limit increased to $1 million
- Bonus depreciation is increased to 100% on qualified property
- Fewer businesses required to use accrual basis:
- You can now continue to use cash basis until gross receipts exceed $25 million.
- Interest Expense is limited to 30%:
- A business can deduct interest but only to the extent of 30% of the sum of Adjusted Taxable Income and Taxable Interest Income.
- Entertainment expenses are no longer deductible.
- Formerly limited to 50%, entertainment expenses are now entirely nondeductible and should be separated from meals.
- Limitation on active pass-through losses. Formerly unlimited, these losses will now be limited to $500,000 for married couples filing jointly, $250,000 for all others.
- Reduction of federal and Idaho income tax rates.
- Corporate tax rates will now be a flat 21% for federal tax. The top rate for Idaho corporations is now 6.925%.
- The federal individual tax rate structure has changed to reduce most taxpayers’ top tax bracket by 2-3%. For example, most taxpayers in the 15% bracket for 2017 will be in the 12% bracket for 2018. You can find out more detail on the new tax brackets here.
- Idaho has decreased its top individual tax rate to 6.925%.
Contact Lonny Hytrek and his team of tax professionals if you have questions about how these changes will affect your tax situation!