Taxes, across the board, are subject to change. In the United States, the Trump administration has changed quite a few tax laws for 2018-2019. While some are in favor of these changes, there has been some backlash.

As a business operating in the United States, you’re required to be aware of all the changes. The Tax Cuts and Jobs Act legislation was signed in December 2017. It made nominal reductions in income tax rates for most income brackets while tax rates on corporations were slashed significantly. Tax deductions were increased on owners of pass-through entities as well. If you’re unsure of how this tax law affects your business, as well as employees, here’s everything you need to know:

Individual taxes

Even though there have been changes in tax rates, the essence of income tax has remained progressive in nature. Richer individuals will still pay a larger sum in income tax. All taxpayers will be able to take advantage of flexible tax deductions as well. Tax deductible items are: personal casualty, donating to charities, mortgage interest, medical expenditure, theft, etc.

As a taxpayer, you should be aware that personal tax exemptions have been done away with, to make up for which the standard deductions have been improved. An annual inflation adjustment will also be provided for, though that means your tax bracket will increase and so will the applicable tax rate.

Those with family can take advantage of family tax credits. These credits reduce the amount paid per dollar. Our experts have analyzed these changes to benefit those with families.

Business tax changes

Business taxes were always a huge setback for small or new businesses. The change in tax laws has been favorable for companies of all sizes. Tax rates have been reduced significantly in an attempt to incentivize local output.

Another favorable change in law is the pass-through provision. Pass-through organizations like small businesses, partnerships, and sole proprietorships can avail a 20% deduction of their tax liability. Many businesses are pleased with this change as it allows them to improve their financial status and focus the funds saved on other aspects of the business. However, some businesses can lose deductions if they lack the assets. Your business needs a tax professional to help.

It’s also important to state that this tax deduction isn’t applicable on law services, medical care, actuarial sciences, arts, financial services, accounting, consulting, and other services.

Previously, small businesses were able to deduct their tax liability by 50% of their first year depreciation, but this act has allowed businesses to now deduct 100% of the depreciation charged.

Previously, entertainment expenses were also tax deductible, but with the new law signed, meeting new clients is no longer tax deductable. Organizing employee gathers and celebrations is still, however, deductible.

To learn more about the implications of the new tax laws, hire our tax preparation experts in Delray Beach. We also offer medical billing services, payroll services, and accounting solutions.