The 2017 Tax Act was recently passed and represents the most significant change to the tax code in over 30 years. The tax reform legislation was signed into law by President Trump on Friday, December 22, 2017.
One of the key factors driving tax reform was reducing the corporate income tax rate in order to be more competitive in the global marketplace. In 2018, the corporate tax rate will be reduced from 35% to 21%. Congress recognized that it needed to provide a similar tax benefit to individuals that invest in other entities such as sole proprietors, partnerships, and S corporations. Congress, therefore, created the qualified business income deduction which in the simplest terms is a deduction equal to 20% of an individual’s combined business income. The deduction, however, is anything but simple and may not be available to individuals invested in service businesses (e.g., law, health, etc.) and is subject to other various limitations.
Click here for a summary of the key provisions in the new law.
The summary article was provided by Jay H. Gray with CliftonLarsonAllen of Central Florida located in Winter Haven, Florida.
The tax professionals at CliftonLarsonAllen can answer any questions you have regarding the legislation and devise a personalized yearend tax plan to help you take advantage of opportunities that the new law presents.