Prior to adjourning for the year, Congress was finally able to pass the long-awaited tax reform bill. The bill’s ultimate impact on small business and pass-through entities continues to be evaluated, but some of the provisions that impact IEC members include the following:
- An increase to the current Section 179 expensing from $500,000 to $1 million for smaller businesses.
- A 20-percent deduction (reducing the maximum marginal rate to 29.6 percent) for qualified pass-through businesses. Estates and trusts also are eligible to claim the deduction. Noncorporate taxpayers are not permitted to deduct business losses in excess of business income plus $500,000 (for joint return filers). This deduction is available beginning Jan. 1, 2018, but expires after Dec. 31, 2025.
- Retention of the estate tax, with a doubling of the exemption thresholds to approximately $11 million and $22 million, with continued inflation indexing after Dec. 1, 2019 (but reverting to pre-Act law after 2025).
IEC will continue to work with coalition partners to help tweak the impact the new law has on pass-through businesses and continue its efforts to eliminate the estate tax.