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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 a Family Business Lawyer.®

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