It’s still early in 2018, but the Tax Cuts and Jobs Act passed at the end of last year seems to be having a positive effect on the economy and business in general.
Here’s a quick summary of the main benefits for business owners:
The main provisions in the final bill are a reduced corporate tax rate and a significant deduction for all pass-through businesses and that is where a huge number of people who benefit from pass-through
business income benefit most. Almost 25 million people filed Schedule C attachments to their tax returns, which is how most people account for pass-through income. It averages out to about one of every six taxpayers.
Now consider who files a Schedule C; sole proprietors, partnerships, limited liability companies, independent contractors, and free-lancers. All will benefit from the 20% deduction on pass-through income with one limitation: married individuals who own service-based businesses like law firms or doctor’s offices can only claim the deduction if their annual income is below $315,000 ($157,500 if single).