Wednesday, February 15, 2017

Will Trump's Tax Plan Benefit Small Businesses?

Because of a Republican-held Congress, and the new Trump administration, there has been talk on a new tax reform. In fact, according to Steven Mnuchin, Trump's [now confirmed] pick to head the Treasury department[now confirmed],that there will be  two comprehensive tax reform plans under this administration. But how will all this affect small business? 

President Trump has repeatedly said that he will cut corporate taxes down to 15%. But most small businesses are in the form of S-corps- partnerships and limited liability corporations (LLC). In response to this, the two plans propose three tax brackets- 12%,25%,and 33%. And to repeal the Net Investment Income Tax (NIIT)- which, according to the IRS, " applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts."

With the Trump plan,businesses will be able to elect a max rate for business income at 15%. "The Blueprint" allows for 25%. According to Entrepreneur, "small business owners could realize a savings of up to 28.4 percent on their K-1 income from the companies they own."

To learn more about "The Blueprint" or Trump's tax reform and how it can affect your small business, check out this piece by Entrepreneur.

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