Are you taking advantage of the changes to the tax code for 2018?
Here is just a quick list of some of the chagnes that will have a direct impact on your bottom line:
The graduated tax rate structure of 2017 capped out at a top tax rate of 35%. This is being replaced by a flat rate of 21%. This is great news for man C corporations as their taxes will be reduced. There is also a change when it comes to cash accounting. Formerly, it was not an option for corporations averaging $5 million or more in gross receipts for the three prior years. This rule has been replaced by a $25 million gross receipts test.
Section 179 Deductions
Under Section 179 of the Internal Revenue Code, a business could expense up to $500,000 of the cost of qualified business property, subject to a dollar-for-dollar phase-out above $2 million. The new tax code doubles the maximum allowance to $1 million and increases the phase-out threshold to $2.5 million. One thing to note: The maximum allowance is still limited to the amount of income from business activity.
In recent years, the percentage for first-year “bonus depreciation” deductions has fluctuated, complicating tax planning. Now the new law hikes the bonus depreciation deduction from 50% to 100% for five years and then gradually phases out the deduction over the next five years. Added bonus: The deduction has been expanded to include “used” property that otherwise qualifies under this provision