How Recent Tax Law Changes May Impact Your Business

Staying updated on changes to tax laws is crucial for businesses of all sizes. Recent updates can significantly affect your tax liabilities, deductions, and overall financial strategy. At Wilson & Associates CPA, we help businesses understand and adapt to these changes, ensuring compliance and optimal tax outcomes. Here’s an overview of how recent tax law changes may impact your business and what you can do to prepare.

Corporate tax rates are often subject to adjustments in new legislation. These changes can influence how much your business owes at the end of the year.

What It Means for Your Business:

• Lower rates can increase after-tax profits, freeing up capital for reinvestment.
• Higher rates may require you to reassess your pricing strategies or operational costs.

Action Step: Work with a CPA to forecast tax obligations under the new rates and adjust your financial plans accordingly.

New legislation often modifies the rules for deductions like the Qualified Business Income (QBI) deduction, which allows eligible businesses to deduct up to 20% of their income.

What It Means for Your Business:

• Adjustments to deduction thresholds or eligibility criteria may affect your taxable income.
• Certain industries may gain or lose benefits based on the new rules.

Action Step: Review your eligibility for deductions and ensure proper documentation to maximize your benefits.

Recent updates may include extensions, modifications, or eliminations of credits like the ERC or other pandemic-related relief measures.

What It Means for Your Business:

• If you’ve retained employees during challenging periods, you may still qualify for credits.
• Changes to these programs could impact cash flow planning.

Action Step: Consult a CPA to determine eligibility and file amended returns if necessary to claim missed credits.

Tax law changes often address how businesses can depreciate assets or deduct the cost of capital expenditures.

What It Means for Your Business:

• Bonus depreciation rules may shift, affecting how quickly you can recover costs for new equipment.
• Limitations on certain asset categories could impact your investment strategy.

Action Step: Plan asset purchases strategically to take full advantage of current depreciation rules.

The cap on SALT deductions remains a significant consideration for businesses, particularly those in high-tax states.

What It Means for Your Business:

• The limitation may increase your effective tax rate, especially if your business pays high property or income taxes.
• Workarounds introduced by some states could provide relief.

Action Step: Stay informed about state-specific measures and consult with a CPA to minimize your tax burden.

Businesses operating internationally may face changes to rules governing foreign income and tax credits.

What It Means for Your Business:

• Adjustments to global intangible low-taxed income (GILTI) provisions and foreign tax credits can affect multinational operations.
• Increased reporting requirements may add administrative complexity.

Action Step: Collaborate with a CPA experienced in international tax compliance to navigate these complexities.

Understanding and adapting to tax law changes is critical for maintaining compliance and optimizing financial performance. At Wilson & Associates CPA, we specialize in helping businesses navigate these changes with confidence and clarity.

Contact us today to schedule a consultation and ensure your business is prepared for the latest tax updates.