Business Changes Under the New Tax Law 2018

2018 Tax Changes for Businesses include:

  • Calculating Your Tax ReturnEasing 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!

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