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What tax breaks does Trump’s new tax law offer small businesses in 2019?

Clarifying Questions

Q: What tax breaks does Trump’s new tax law offer small businesses in 2019?

-Penny Pincher

A: Dear Pincher:

The biggest break offered by the Tax Cuts and Jobs Act (TCJA) was lowering the tax rate for C corporations from 35% down to 21%. But very few small businesses are structured as C corporations, so this cut probably won’t apply to you.

However, the TCJA does offer other tax breaks that small businesses like yours may qualify for.

Your company is most likely structured as a sole proprietorship, partnership, limited liability company (LLC), or an S corporation. These entities are known as “pass-through” businesses, because the taxes paid by these companies pass through and are paid at the owner’s personal rate.

The TCJA offers these companies a straight 20% deduction on “qualified business income,” so if your business qualifies, you’ll only be taxed on 80% of your net income. This deduction is subject to several limitations, so check with us or a qualified CPA to see if you can take it.

Other new breaks for small businesses include a tax credit for employer-paid family leave benefits, increased depreciation allowances for business vehicles, and a 100% first-year bonus depreciation for both new and used qualifying assets.

To take advantage of all of the tax savings offered by the TCJA, meet with us as your Creative Business Lawyer.®

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