Learn how it impacts your business
The new tax reform bill was signed into law by President Trump on December 22. NFIB fought hard to ensure that the final legislation provided significant tax relief to nearly all small businesses. We supported it and urged every Member of Congress who cares about small business to do the same.
The tax cuts let small business owners keep more of their money to reinvest in their businesses, create more jobs, pay higher wages, purchase more equipment and vehicles, make capital upgrades, increase inventory, and engage in the kind of commercial activity that drives the economy and creates growth.
This is a summary of items that are subject to variation and exceptions. It is not to be relied upon as tax advice.
Individual Tax Rates
For a period of 8 years, reduces individual rates for many taxpayers and suspends many deductions. Uses the following rates: 37%, 35%, 32%, 24%, 22%, 12%, 10%, and 0%
For a period of 8 years, roughly doubled to $12,000 individual/$24,000 joint, indexed
Passthrough Business Taxation (sole proprietorships, S corps., partnerships)
For a period of 8 years:
(a) for incomes below $157,500 individual/$315,000 joint, indexed, deduct 20% of business income
(b) for incomes above $157,500 individual/$315,000 joint, indexed, deduct 20% of business income not exceeding limitation of 50% of wage income, except deduction phases out quickly above $157,500 individual/$315,000 joint for specified service businesses (for example, lawyers, accountants, doctors)
Alternative Minimum Tax for Individuals
For a period of 8 years, applies only above $500,000 individual/$1 million joint, indexed
Estate Tax Relief
For a period of 8 years, excludes roughly $11 million individual/$22 million joint, indexed
For future (not set to expire), corporate tax rate reduced to 21% and corporate Alternative Minimum Tax repealed
Section 179 Expensing
For future (not set to expire), raised from $500,000 to $1 million per year, indexed
Individual Mandate (Obamacare)
Penalty for noncompliance repealed effective January 1, 2019
For future (not set to expire), cash method of accounting extended to many businesses that are below $25 million in annual gross receipts on average for the past three years