SEMA is hosting an online seminar today to teach small business owners about how the United States’ new tax law will impact auto shops and employees. This free event is a must watch for every U.S. trimmer.
President Donald Trump’s “Tax Cuts & Jobs Act” (H.R.1) went into effect on January 1, but many small business owners and employees are confused about how it will impact them.
A tax bill summary published by SEMA in December states:
The “Tax Cuts and Jobs Act” permanently reduces the corporate tax rate from 35% to 21% while scaling back deductions for corporate interest expenses, moves the U.S. to a territorial tax system where only income generated from within the U.S. is taxed, and implements a one-time tax on overseas profits brought back to the U.S.
For individual taxpayers, the new law reduces marginal tax rates, which will be in effect through 2025: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Prior to enactment of the new law, taxes rates are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. H.R. 1 eliminates the personal exemption and doubles the standard deduction to $12,000 for individuals and $24,000 for married couples filing jointly while eliminating many credits and deductions that complicate tax preparation.
Of particular note, the new law eliminates a provision in the Affordable Care Act (Obamacare) that requires individuals to either purchase health insurance or pay a fine, doubles the Child Tax Credit from $1,000 to $2,000, reduces the mortgage interest deduction from $1 million to $750,0000, caps write-offs for state and local property taxes at $10,000 and expands the medical expense deductions.
H.R. 1 provides “pass-through” businesses (sole proprietorships, partnerships and S corporations) that currently pay taxes at the individual rate of their owners with a 20% tax deduction that applies to the first $315,000 of joint income. This deduction ensures that these business owners pay a marginal tax rate of no more than 29.6%. The law allows businesses to write off the full cost of investments for the next five years, doubles the exemption from the estate tax, preserves the research and development credit and allows small businesses to continue to write off interest expenses on loans.
Confused? You’re not the only one. However, we all need to understand the new law quickly, so as to protect our interests during the upcoming tax season.
SEMA’s seminar is titled “Understanding the New Tax Bill – How Will it Impact Small Business?”
It will take place on January 9 at 12:00 pm EST, and include a presentation by Paula Calimafde, president and general counsel of the Small Business Legislative Council (SBLC), and Jessica Summers, SBLC’s strategic policy director.
Registration is free, but only open to SEMA members. To register, click here.